How to Interpret Business Interruption Coverage – And What Most Owners Miss

When disaster strikes—whether it’s fire, storm, or water damage—your property policy may help rebuild walls and replace equipment. But what about the income your business loses while you’re shut down? That’s where Business Interruption coverage comes in.

Unfortunately, many business owners assume this coverage automatically protects them in a shutdown. The truth? Business Interruption (BI) policies are some of the most misunderstood and underutilized parts of commercial insurance. Misinterpretation can leave owners blindsided when revenue dries up, payroll is due, and expenses keep coming.

At Gavnat Public Insurance Adjusters, we’ve guided hundreds of businesses through BI claims. Here’s what you need to know—and what most owners miss.

What Is Business Interruption Coverage?

Business Interruption coverage (sometimes called “Business Income coverage”) is designed to replace lost income when a covered peril—like fire, hail, or water damage—forces your business to reduce or suspend operations.

It typically covers:

• Lost Revenue – The income you would have earned had the loss not occurred.
• Operating Expenses – Rent, utilities, and other ongoing costs.
• Payroll – Keeping employees on staff while the business is interrupted.
• Temporary Relocation Costs – Expenses tied to moving into a temporary location.

The Common Misinterpretations Owners Make

Most commercial property owners overlook at least one of these areas:

1. Waiting Periods and Coverage Triggers

Policies often have a waiting period (24–72 hours) before BI coverage kicks in. Owners assume coverage starts the moment damage occurs—but the clock usually starts once operations are formally suspended.

2. Coverage Is Tied to Physical Damage

Your business must usually sustain direct physical damage for BI to apply. For example, smoke damage to your restaurant’s kitchen qualifies. A power outage from a nearby substation fire may not—unless you have “Service Interruption” coverage.

3. Extra Expense vs. Business Interruption

Extra Expense coverage pays for costs to minimize downtime (like renting temporary office space). BI pays for lost income. Owners often confuse the two, leaving gaps in recovery.

4. Underestimating the Period of Restoration

Policies define how long they’ll pay—commonly until the property is “restored with reasonable speed.” That might not reflect your real-world recovery time (supply chain delays, permitting issues, or contractor availability).

5. Overlooking Contingent Business Interruption

If your business depends on suppliers or customers who sustain losses, you may have coverage—but only if it’s specifically included. Many owners assume it’s automatic.

Why Most Owners Miss Out on Full Compensation

Insurance carriers often calculate BI losses narrowly—undervaluing projected revenue, ignoring growth trends, or excluding certain expenses. Without an advocate, business owners accept less than what they’re entitled to.

We regularly find:

• Underreported income losses – Carriers base calculations on past earnings, ignoring seasonal peaks or pending contracts.
• Ignored payroll obligations – Owners short-changed on keeping staff paid.
• Missed relocation costs – Overlooked expenses tied to temporary facilities.

How Gavnat Helps Owners Maximize Business Interruption Claims

As public adjusters, our role is to interpret your policy, calculate your true business loss, and advocate for full settlement.

We help owners by:

• Reviewing BI policy language and endorsements for hidden limits or exclusions.
• Preparing detailed financial projections to reflect what your business would have earned.
• Documenting ongoing expenses, payroll, and temporary relocation costs.
• Negotiating with the insurance company to ensure nothing is left off the table.

The result? Owners recover the maximum business interruption compensation—so they can stabilize operations, retain employees, and get back on track faster.

Final Thoughts

Business Interruption coverage can make or break your company’s recovery after a loss. But interpreting the fine print is rarely straightforward—and insurance carriers don’t make it easy.

Don’t leave money on the table. If your business has sustained damage, let Gavnat review your policy and claim.

Contact Gavnat Public Insurance Adjusters today for a no-obligation consultation. We’ll help you uncover what your Business Interruption policy really covers—and fight to secure every dollar you’re owed.