How Is Business Interruption Insurance Calculated?

Insurers generally calculate business-interruption losses by comparing expected income with actual results during the restoration period, then accounting for continuing expenses and costs you avoided. Your policy’s income definition, limits, and waiting period govern the payment. The policy defines the covered income measure and may address payroll, extra expense, seasonality, and partial operations. Payment is limited by the covered trigger, period, waiting period, and available limit.

Read the form’s business-income definition and records clause before a loss. Maintain financial statements, sales histories, budgets, payroll, invoices, and expense records. Ask whether the limit is actual-loss-sustained or capped, and how the policy handles trends, resumed operations, and extra expenses.