Business income is a coverage you can find on a commercial policy that will pay you income lost due to a business shut down due to a covered loss. The last two words of that sentence are probably the most important.

I have been involved in a number of conversations with clients recently asking if this coverage will kick in. I was asked today if this coverage would kick in due to shutdown because of the coronavirus. I’ve been asked if this would cover if income dropped due to road construction. I have also been asked if it would cover if business shut down because of smoke from forest fires. The answer to all three is “no”.

Fear is not a covered loss. Neither is construction or environmental factors. The most common loss when this would kick in is a fire or water claim. If your business cannot operate due to a fire, you will receive your average monthly receipts while you are down. Same with a covered water loss such as a burst pipe.

There may be a waiting period before this coverage is available. It is not uncommon for that to be 72 hours. Sometimes this coverage will max out at 6 months and some policies will extend as far as 18 months. As always, it’s best to consult your agent about the details of coverage on your policy.

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