What is the term for insurance that covers a business's lost income after a covered disaster?

Business interruption insurance covers a business’s lost income after a covered disaster. It is also called business income insurance.

The coverage is designed to help restore a company’s finances to roughly where they would have been if the disruption had not occurred. Depending on the policy, it may replace lost profits, pay continuing fixed expenses such as rent and payroll, cover extra costs of operating temporarily elsewhere, and respond to certain government-ordered closures.

It is commonly added to commercial property insurance, a business owner’s policy, or a package policy. A key limitation is that the interruption normally must result from a covered cause of loss under the underlying policy. Property insurance generally pays for physical damage; business interruption insurance addresses the resulting financial consequences.

Some policies also offer contingent business interruption coverage. That applies when damage to a supplier’s or customer’s premises prevents the insured business from operating normally. The coverage period and waiting period are defined by the policy, so it is not an unlimited guarantee of every lost sale.