Business interruption coverage pays for the income your business loses while it cannot operate. It is separate from the coverage that repairs the building, and it is usually the larger number.
It is also where most commercial property claims fall apart. Building damage is visible, and the repair estimate is concrete. Lost income is a projection, and carriers dispute projections.
The Threshold Question
Before anything else, most commercial property policies require direct physical loss of or damage to property. That requirement also governs interruption coverage, which means the analysis starts with the property, not the income.
Fire, water intrusion, structural damage, and collapse ordinarily satisfy it. So does contamination in appropriate circumstances, where what makes the property unusable is sufficiently connected to the property itself. That distinction has consequences for smoke and particulate claims after a wildfire, and it is worth examining rather than conceding.
What the Coverage Pays
A typical policy responds to more than lost revenue:
- Net income the business would have earned, and continuing operating expenses such as payroll and rent
- Extra expense, meaning the additional cost of staying open, including temporary space, equipment rental, and expedited shipping
- Civil authority coverage, where a government order denies access to the premises because of damage to nearby property
- Ingress and egress coverage, where access is physically blocked
- Contingent business interruption, where the physical damage occurred at a supplier or a customer rather than at your own property
Each of these carries its own conditions, sublimits, and waiting periods. Coverage a business is entitled to frequently goes unclaimed because no one read past the main insuring agreement.
The Period of Restoration
This is the fight in most interruption claims. The policy pays for the time reasonably required to repair or replace the damaged property, not the time the business actually took to recover.
Carriers therefore argue the repair should have taken less time. Businesses point to permitting delays, contractor availability, supply chains, and the practical reality of reopening. The difference between the carrier’s estimate and the actual timeline is often the difference between a partial payment and a full one, and it should be documented as it happens, not reconstructed afterward.
Some policies extend coverage for a period after operations resume, recognizing that revenue does not return the day the doors reopen. That extension is frequently overlooked.
Proving the Loss
The measurement is what the business would have earned had the loss not occurred, which requires establishing a baseline and projecting forward. Carriers retain forensic accountants to do the same exercise and arrive at a lower number.
The disputes are predictable: whether the baseline should reflect prior years or a growth trend. Which expenses continued and which did not. Whether payroll for retained staff is recoverable, and how much of the decline is attributable to the damage rather than to market conditions.
These are not questions the policy answers by itself, and a business that submits summary figures and waits usually receives a summary offer in return.
Conditions the Business Must Meet
Policies impose obligations on the insured, and carriers enforce them. Prompt notice. A sworn proof of loss within a stated period. Production of records. Many policies also require an examination under oath, a formal proceeding, not a conversation with an adjuster.
Most commercial policies also contain their own suit provision, a deadline for filing that is separate from and often shorter than the ordinary statute of limitations. It can run while an adjustment is still open. If your claim has been under review for a long time, confirm where that deadline stands. This is one place where a policy that was never properly placed becomes its own problem, which is the subject of my work on broker negligence.
When the Carrier Underpays or Denies
An interruption claim can be denied outright, or resolved with a payment far below what the policy owes. Both are contested the same way: by establishing what the policy requires and what the evidence shows. Where the carrier’s position is unreasonable, the business may also have a claim for insurance bad faith beyond the benefits themselves. Where the interruption follows a fire or wildfire, this work runs alongside my fire, wildfire, and property claims practice.
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If your business has an open interruption claim, a denial, or an offer that does not reflect what you lost, contact me. I meet with clients in English, Armenian, and Russian.