What is the primary purpose of business interruption insurance?

The primary purpose of business interruption insurance is to replace lost income during a business shutdown. This coverage is essential for businesses that may experience disruptions due to unforeseen events, such as natural disasters, fires, or other incidents that lead to temporary closure or reduced operations.

When a business cannot operate, it may still incur fixed costs like rent, salaries, and other ongoing expenses, despite having no income coming in. Business interruption insurance is designed to mitigate this risk by providing financial support that allows the business to maintain its operations and cover these critical fixed expenses until it can resume normal operations. This protection helps ensure the business can recover and rebuild without suffering catastrophic financial losses due to the disruption.

In contrast, the other options relate to different aspects of business insurance: covering physical damage pertains to property insurance, liability claims involve general liability insurance, and managing employee health benefits is connected to health insurance and employee benefit plans. These options do not address the specific need that business interruption insurance fulfills, which is centered on the income aspect during a business closure.