Business income claims after a property loss
Lost income, continuing expenses and payroll, and the clock that decides how much is paid
When a fire or water loss shuts a business down, the building is often the smaller number. What the business stops earning while it is closed, and what it keeps paying anyway, can be worth more than the repairs. That part of the claim is business income coverage, sometimes called business interruption.
What does business income insurance cover?
Business income coverage pays the net income the business would have earned and the expenses that continue while it is closed or slowed down after a covered loss to the property. Rent, loan payments, utilities and, depending on the policy, payroll are the usual continuing expenses. Extra expense coverage is often alongside it: the cost of a temporary location, rented equipment or overtime to keep operating.
It applies only after direct physical damage from a covered cause. A slowdown with no damage to the property, or damage from an excluded cause, usually is not covered.
Does business insurance cover lost wages?
It depends on how the policy treats payroll. Many policies cover ordinary payroll as a continuing expense for some or all of the restoration period, and some limit it to a set number of days. Check the business income section of your policy for how payroll is handled before deciding who stays on.
The clock that decides the claim
Business income is paid for the period of restoration: the time it should reasonably take to repair the property and reopen. Most policies also have a waiting period, often a few days, before coverage starts. Some include an extended period after reopening while sales recover.
The restoration period is where these claims get small. If it is set too short, or the building claim drags on past it, the business carries the difference. The building claim and the income claim have to be worked together, because a slow repair scope shortens the income claim without anyone saying so.
How a business income claim gets proven
- Financial records: tax returns, profit and loss statements and sales history from before the loss, ideally by month to show the business's seasons.
- Continuing expenses: leases, loan statements, utility bills and payroll records.
- Extra expenses: every receipt for keeping the business running.
- The repair timeline: contractor schedules and delays, in writing.
Some businesses keep running through the repairs. In one Royal Oak office, staff kept working at desks over a floor stripped back to concrete. The offer was $11,630, and the claim settled at $113,600 once the whole scope was itemized. Every claim is different, but keeping a business open does not mean the loss is small.
For fire losses in particular, see business fire insurance claims.
See it on a real claim
Business shut down or slowed down? |Count the income, not just the building.
Tell us what happened to the property and how it affected the business. We'll tell you honestly what the claim is likely to include. No cost, no obligation.
