What does business interruption insurance cover?

Business interruption insurance is designed to cover the loss of income that a business suffers as a result of a temporary disruption in its operations, typically due to an insured event, such as a fire, natural disaster, or other significant incidents that affect the ability to conduct business. This type of insurance helps ensure that businesses can maintain financial stability during the recovery period by compensating for lost revenue and covering ongoing expenses, such as payroll and rent, while the business is unable to operate normally. It is specifically focused on the financial implications of downtime rather than the physical assets or legal liabilities that might arise in different contexts.

The other options, while relevant to overall business risk management, do not align with the specific purpose of business interruption insurance. Compensation for property damage is typically covered by property insurance, healthcare expenses for employees fall under health insurance or employee benefits, and legal fees related to lawsuits are usually addressed through liability insurance.