Property · Insurance Term
Business Income (Business Interruption)
Definition
Business income coverage, often called business interruption, replaces the income you lose and helps pay continuing expenses when covered physical damage forces your operations or rental income to stop while the property is repaired. It is usually triggered by the same kinds of damage your property policy covers.
In Plain English
If a fire closes your hotel for eight months, the building coverage pays for repairs, but the lost room revenue, payroll and loan payments keep coming. Business income coverage fills that gap. It typically pays lost net income plus continuing normal operating expenses during the period of restoration.
For landlords, the version that matters most is loss of rents, which replaces rent you cannot collect while units or spaces are untenantable. Extra expense coverage pays reasonable added costs to keep operating or reopen faster, such as temporary space.
Most policies require direct physical loss from a covered cause, and many start paying only after a waiting period, often 72 hours. Coverage usually ends when repairs should reasonably be finished, though an extended period of indemnity can add time for income to recover.
Not sure how your policy handles this? Have us review it, or get a quote.
Example
Hypothetical: a covered fire closes a 60-room hotel for six months. The hotel normally earns $100,000 a month in net income and continuing expenses. With adequate limits, business income coverage would pay about $600,000 for the shutdown, subject to the policy's waiting period and terms.
Why It Matters for Texas Property Owners
Flood is excluded from standard commercial property policies, and NFIP flood policies do not cover business income. Texas owners exposed to hurricanes and flooding should ask how lost income would be handled for each type of storm loss.
What to Watch For
- Estimate how long a rebuild would really take, including permits and contractor shortages, and set the limit for that period.
- Check the waiting period and whether it applies to extra expense too.
- Ask whether coverage is on an actual loss sustained basis or a fixed dollar limit.
- Confirm whether coinsurance applies to business income and how the limit was calculated.
Common Questions
Does business income cover lost income after a flood?
Not under most standard property policies, because flood is excluded, and NFIP policies do not include business income. Some private flood policies may offer it; ask your agent.
How much business income coverage do I need?
A common approach is a business income worksheet that projects 12 months or more of net income and continuing expenses. Longer rebuild times mean higher limits.
Sources
Last updated October 14, 2026 · Primesure editorial team · How We Write