What is "business interruption insurance"?

Business interruption insurance is a type of coverage that addresses the financial impact of a disruption to a business's operations. It is designed to replace lost income that a business would have earned if not for a covered event, such as a fire, natural disaster, or other incidents that lead to temporary closure or significant operational disruptions. This type of insurance is critical for ensuring that businesses can continue to pay fixed expenses such as rent, utilities, and employee salaries during the period they are unable to operate normally.

For example, if a small business is forced to close for several weeks due to a fire, business interruption insurance would help cover the loss of revenue that the business would have generated during that time, allowing it to maintain cash flow and remain solvent until it can reopen.

The other options refer to different types of coverage that do not pertain to the replacement of lost income due to business disruptions. Equipment repairs, employee health benefits, and liability for workplace accidents are important aspects of a comprehensive insurance program, but they do not specifically address the income losses incurred during interruptions of business operations.