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 type of insurance is designed to help businesses continue to operate financially in the event of disruptive events, such as natural disasters, fires, or other unforeseen circumstances that cause property damage.

When a business is forced to close temporarily due to such incidents, it may experience a significant loss in revenue. Business interruption insurance provides financial support during this period, allowing the business to cover fixed ongoing expenses like rent, salaries, and utilities even when income streams are halted. This coverage is vital for helping businesses maintain stability and recover more smoothly after the adverse event has passed.

Other options include covering physical damage to property, which is a different type of insurance (property insurance), insuring against liability claims, which falls under general liability insurance, and managing employee health benefits, which pertains to health insurance or employee benefits programs. All of these are important aspects of running a business; however, they do not fulfill the specific role that business interruption insurance plays in mitigating income loss during interruptions in operations.