What does business interruption insurance primarily cover?

Business interruption insurance is specifically designed to cover the loss of income that a business incurs due to its inability to operate as normal after a disruptive event, such as a fire, flood, or other disaster. This type of insurance helps to ensure that a business can maintain its financial stability and continue to meet its fixed expenses, like rent, salaries, and other operational costs, even when it is temporarily closed or unable to function effectively.

By covering the loss of income during the period of interruption, business interruption insurance plays a crucial role in helping businesses recover from disruptive events and get back on their feet as quickly as possible. It is focused on the economic impact of having to halt operations rather than the physical damages or repairs.

In contrast, other options focus on different aspects of financial or material loss. Repair costs after damage pertain more to property insurance, while losses from employee unemployment are not typically covered under business interruption policies. Physical damage to assets is also more aligned with property or casualty insurance, which covers the damage to physical properties rather than the subsequent financial losses from being unable to operate.