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What is business interruption coverage, and do I need it?

On Behalf of | May 29, 2024 | Delayed And Denied Insurance Claims | 0 comments

As Texans know, insurance coverage has never been more important. We use it for our homes, cars, life and health. But, many may not know that you can even use it for your business too. Business interruption coverage stands can be a crucial safety net for businesses. It offers financial protection against lost income and operational expenses in the wake of unforeseen events. However, what is business interruption coverage insurance, and do businesses actually need it?

What does business interruption coverage encompass?

Business interruption coverage insurance provides compensation for lost income and essential operating costs when a business is compelled to halt operations due to a covered incident. It typically initiates within 24 to 48 hours post-incident.

What does it cover?

First, it covers business income. It accounts for net profit or loss pre-tax and ongoing operational expenses, including payroll.

Next, it normally has extra expense coverage. This covers additional expenses incurred to restore the business, whether at its original or temporary location.

There is also contingent business interruption coverage. This compensates for income loss stemming from property damage at a supplier’s or customer’s site.

Finally, there is civil authority coverage. This applies when a civil authority mandates business closure due to nearby physical damage that results in financial loss.

Assessing the need for business interruption coverage in Texas

While advisable for most small businesses, business interruption coverage insurance is indispensable for those heavily reliant on physical premises or assets susceptible to risks like fire, theft or natural disasters. Temporary closures due to such incidents can cause substantial financial strain that makes this coverage pivotal for business continuity.


Integrating business interruption coverage into your insurance portfolio is a prudent move for safeguarding against the fallout of unforeseen disruptions. However, read your policy to understand what specifically is and is not covered. Embracing business interruption coverage can fortify Texas businesses against the economic turbulence unleashed by unexpected calamities. This can ensure they can weather storms and emerge resilient.