What type of loss does business interruption insurance protect against?

Business interruption insurance is specifically designed to protect against the loss of operational income that occurs when a business is unable to conduct normal operations due to a covered event, such as a natural disaster or fire that causes property damage. The key aspect of this coverage is that it compensates the business for the income that would have been earned during the period of disruption, helping to cover ongoing expenses such as rent and payroll even when the business is temporarily closed.

This type of insurance addresses the financial implications of interruptions, ensuring that the business can navigate through the tough times without suffering severe financial setbacks. The focus here is on the operational income loss, which is crucial for maintaining the business's solvency and ability to resume normal operations when possible. Other types of losses, such as legal losses from lawsuits or health-related losses for employees, are not covered by business interruption insurance, as they fall outside the scope of this specific type of insurance.