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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 revenue.
How much does business interruption insurance cost?
Business interruption insurance (also called business income coverage) helps pay for lost income, loan payments, operating expenses (including lease payments), and relocation costs when your small business is forced to temporarily shut down due to a covered peril.
Covered perils include fires, flooding, 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.
The cost of adding business interruption coverage to your commercial property insurance or business owner's policy (BOP) varies significantly based on the scope of your business and your liabilities.
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.
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Understanding business interruption insurance cost factors
A number of factors will impact the cost of business interruption coverage, including:
- Policy limits and deductible
- Industry risks
- Value and construction of your property
- Annual revenue
- Claims history
- Business location
- Number of employees
- Types of coverage
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 a higher policy limit, you’ll end up paying a higher insurance premium.
When you add business interruption insurance to your commercial property insurance or business owner’s policy, you can scale 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 deducible, 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.
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To see insurance costs for businesses in your industry, visit our industry-specific cost analyses.
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
Because business interruption insurance compensates businesses for income loss during a temporary shutdown, businesses with higher revenue tend to pay higher premiums.
While these businesses pay more for coverage, they also receive more compensation.
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 also take your geographical location into account when calculating your insurance premium.
If your business property faces environmental risks, such as natural disasters like windstorms or tornadoes, 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 in your employ, the higher your business interruption premiums will likely be.
The main reason for higher premiums is due to the fact that business interruption will assist in paying lost employee wages. More employees equates to a higher payout, which typically means higher premiums.
Types of coverage
Your business interruption insurance costs can be impacted by the type of coverage you elect to purchase.
You can add endorsements to your business interruption insurance policy, such as extra expense coverage and contingent business interruption insurance.
This will add additional layers of coverage and protection to your policy. It will, however, cost a bit more.
How is business interruption insurance calculated?
In order to get a rough calculation of your business interruption costs:
- Calculate your total annual business income by taking your yearly revenue and subtracting business expenses and operating costs.
- Deduct your taxes from your total to get your net income.
- Use your previous net income to project your next year's income, keeping in mind any projected growth.
- Estimate your period of restoration based on the worst-case scenario for how long it will take you to recover and reopen after a covered loss.
This figure can help you determine how much coverage you may need in the event of a business interruption. You can speak to a licensed insurance agent who can help you with this process.
What’s a period of restoration?
A period of restoration refers to how long your income losses are covered by your business interruption policy. It 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’ve been repaired.
How can you save money on business interruption insurance?
Business interruption insurance offers financial protection when your small business experiences a covered loss under your property insurance policy. 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, then 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.
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Updated: November 18, 2025