Business interruption insurance cost
The cost of business interruption insurance coverage depends on several factors, such as the value of your business’s commercial property, your industry, and your revenue.
How much does business interruption insurance cost?
Business interruption coverage is often included in your commercial property insurance or business owner's policy (BOP) as part of the cost. These policies are usually affordable for Insureon's small business customers, at an average cost of $108 per month and $83 per month, respectively.
Business interruption insurance covers lost profits, operating expenses (including lease payments and loan payments), relocation costs, and employee wages if your small business is forced to temporarily shut down due to a covered peril. It's also called business income coverage, as it protects against loss of income.
Covered perils include fires, burst pipes, and other physical damage covered by property insurance. Pandemics are an exclusion, as business interruption coverage does not protect against lost revenue from communicable diseases. It also does not cover business interruptions related to cyber incidents, such as a data breach.
If your business owns valuable commercial property, operates in a high-risk industry, or earns significant revenue, you’ll need to pay more for business interruption insurance. If you operate a small, low-risk business, coverage will be significantly less expensive.
Understanding business interruption insurance cost factors
A number of factors will impact the cost of business interruption coverage, including:
Policy limits and deductible
The policy limits and deductible you choose impact the cost of your business interruption coverage. The higher your deductible, the lower your premium will be.
If you want business interruption insurance with higher coverage limits, you can expect your premium to increase.
When you add business interruption insurance to your commercial property coverage or business owner’s policy, you can scale the amount of coverage to fit your business.
Selecting a more costly deductible is an easy way to save on your premium, but be sure to choose one that you can still afford. If you can’t pay your deductible, you can’t collect on a claim.
Industry risks
If you work in an industry where an interruption would result in bigger financial losses, you’ll probably have to pay more for business interruption insurance.
For example, a restaurant will likely pay a higher insurance premium than a law firm because restaurants depend on a physical location to bring in customers, and have a higher risk of insurance claims arising from fires and other disruptions.
Top industries we insure
Value and construction of your property
When property damage forces your business to close or move to a temporary location, business interruption insurance covers the cost of rent or relocation until you can reopen.
If you own or rent valuable commercial property, your business interruption insurance premiums will be higher, but so will your payout if your business is forced to shut down.
Annual revenue
Claims history
Insurance companies will consider your claims history to determine how risky you are to insure. Companies that have made past business interruption claims will pay more for insurance than those with a clean history.
Preventing claims as much as possible is a great way to keep future insurance costs low.
Business location
Your insurance provider will take your geographical location into account when calculating your insurance premium.
If your property faces environmental risks, such as windstorms, tornadoes, or natural disasters, your premium may be higher. Land value and local laws can also affect insurance costs.
Businesses with closer proximity to a fire station are often given lower rates due to better emergency response times and lower risk of significant damage in the event of a fire.
Number of employees
The more workers you employ, the higher your business interruption premium will likely be.
The main reason for the increased cost is that business interruption will assist in paying lost employee wages. A bigger employee payroll leads to a higher payout on business interruption claims, which increases your insurance rate.
Types of coverage
The type of coverage you choose to purchase affects the cost of business interruption insurance. You may want to add endorsements (also called riders) to your policy, such as:
- Extra expense coverage pays any extra expenses incurred by a temporary shutdown, such as renting an office, leasing equipment, or paying overtime to staff.
- Contingent business interruption insurance provides financial protection if a key supplier, partner, or customer experiences a disruption that derails your business.
These endorsements boost the protection of your policy, but bring a higher premium.
What is a period of restoration?
A period of restoration refers to how long your income losses are covered by your business interruption policy. The length of it depends on the scale of damage caused by the covered event, such as vandalism that results in cleanup and minor repairs, or a fire at a restaurant that necessitates extensive renovation.
The period of restoration begins after a waiting period that’s usually 24 to 72 hours after your business is forced to close. It ends when the covered damage is repaired, or reasonably could have been repaired.
Property damage isn't always the trigger for a period of restoration. For example, most business interruption policies include civil authority coverage, which activates when a government, police department, or similar agency orders your business to close due to a hurricane, gas leak, or other nearby emergency.
Civil authority coverage typically features a 72-hour waiting period and has its own time limit of up to four weeks of coverage.
How can you save money on business interruption insurance?
Business interruption insurance offers financial protection if your small business experiences a covered loss that leads to a temporary shutdown and lost income. Examples include vandalism, fires, and other direct physical losses.
It’s easy for small business owners to save money on business income insurance without compromising on coverage.
A few strategies to keep costs down and avoid more expensive rates include:
Bundle policies for a discount. Businesses sometimes get discounts when they purchase multiple commercial insurance policies from the same provider. For example, if you own a small, low-risk business, you may qualify for a business owner’s policy.
A BOP bundles general liability insurance and commercial property insurance together at a reduced rate, and you can add business interruption insurance as an endorsement. If you don’t qualify for a BOP, you can add business interruption coverage as an endorsement to your commercial property insurance policy.
Compare quotes. You can lower your out-of-pocket expenses by shopping around and comparing quotes. Different insurance companies offer varying rates, so comparing quotes and picking the best option is a great way to save money.
Pay the annual premium. Insurance companies usually let you choose between an annual payment or smaller monthly payments, with a discount for the annual payment.
Manage your risks. Claims on your insurance make your premium go up. You should strive to minimize and prevent all types of risks to avoid claims and keep your premiums low.
A good risk management plan includes preparation for severe weather and implementation of fire prevention protocols. Installing sprinkler systems and fire alarms can help reduce insurance costs, too.
Whether you're shopping for business interruption coverage or other important policies like auto insurance and workers' compensation, there are many ways to keep your costs low.
You can save money on commercial property insurance by limiting your property damage risks and by comparing insurance quotes from different providers.
Why do small businesses choose Insureon?
Insureon is the #1 independent agency for online delivery of small business insurance. We help business owners compare coverage options from top-rated providers, buy policies, and manage their insurance online.
By completing Insureon’s easy online application today, you can compare free quotes for business interruption insurance and other types of coverage from leading U.S. providers. Our licensed agents are available to help answer any questions related to your business needs.
Once you find the right policy, you can begin coverage in less than 24 hours and get a certificate of insurance (COI) for your small business.
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The average costs on this page were derived from our data on 100,000 small business owners who purchased policies through Insureon. Most of our customers have fewer than five employees, annual revenue ranging from less than $50,000 to more than $200,000, and have been in business for five years or less.