How Much Does Business Interruption Insurance Cost? (2023 Rates)

Thang Truong
Thang Truong
Updated on:

Every company needs to make money to survive. However, natural disasters and other perils can easily force you to close temporarily, preventing your company from earning money and jeopardizing its survival.

Do you know that over 25% of businesses that close after disasters never reopen? This occurs because these businesses fail to plan when their operations are disrupted.

Fortunately, business interruption insurance can protect all of your hard work. Don’t let mother nature decide whether or not your business will reopen. Use a business interruption policy to gain control.

In this piece, we will show you the cost of business interruption insurance. That way, you can make plans on getting your policy.

How much does business interruption insurance cost? 

On average, a business interruption insurance policy costs between $40 and $130 per month, or $480 and $1,560 per year.

Your business interruption insurance policy’s cost is determined by several factors, including your industry, the number of employees, and the types of coverage you select.

Costs can also vary depending on your company’s location and the likelihood of filing a claim.

This is the the average. Your rates will be different. Be sure to shop around with a few companies or work with a top broker like CoverWallet or Simply Business to compare several quotes to choose the cheapest one for your business.

What are the factors that affect the cost of business interruption insurance?

The following variables determine the cost of business interruption insurance:

Business type

The type of business you have influences your risk of physical losses. If you work in a field where property damage is common, you might have to pay more for business interruption insurance. A restaurant, for example, faces a higher risk of fire than an accounting firm. As such, a restaurant owner might pay more for business interruption insurance than an accountant or a law firm.


Your geographic location influences your vulnerability to hazards such as windstorms and wildfires, which can cause property damage and force your business to close. Therefore, if you run your business in an area prone to hazards or that has had several disasters in the past, your business interruption insurance will be high.  

Your revenue

Your premium is calculated based on your expected revenue. That is because business interruption insurance compensates for lost revenue during a temporary shutdown. Therefore, your business interruption insurance will rise as your expected revenue rises. However, the good news is that, while you pay higher premiums, your compensation would also be juicy.

The types of coverages you buy

You can extend the coverage of your business interruption insurance with endorsements. Endorsements allow you to cover areas your regular insurance policy may not cover. The utility services endorsement, for example, covers income losses caused by power outages and other utility service disruptions. In general, the more coverage you have, the higher your premium.

“Actual loss sustained” and “restoration period”?

When looking for business interruption insurance, you’ll probably come across the term “actual loss sustained,” or ALS. This term denotes a company’s true loss or the amount the company would have earned if the interruption had not occurred.

Furthermore, any money the business was able to earn while repairing or restoring its temporarily closed-down property would have to be subtracted from that total to get the true ALS. Your insurer is responsible for paying your true actual loss up to your set policy limit.

You’ll also need to set a restoration period for your business interruption insurance policy. That means how long it will take for your company to reopen after being closed temporarily. Obviously, the longer the insurer must provide assistance, the higher your policy’s cost.

Typically, the restoration period begins on the day of the loss and ends the day you reopen. However, a business interruption insurance policy will typically provide coverage for no more than 12 months.

Coverage limits

Your coverage limit is related to the coverage. It is the maximum payout you expect from your insurer if a covered event occurs. The higher your coverage limit, the better your compensation. However, you’ll pay a higher insurance premium if you want business interruption insurance with a higher coverage limit. 

The value of your commercial property 

Business interruption insurance typically covers the cost of rent or relocating if you lose your company’s building due to property damage. Your business interruption insurance premiums will be higher if you own or rent valuable commercial property. However, a larger premium means you will likely have a larger payout if your company is forced to close.

Your insurance company

The final factor that determines price is the company you buy from. Different insurers have their methods of assessing risks, and therefore, prices might vary depending on the company you choose.

How to find cheap business interruption insurance?

Business interruption insurance should make things easy for you rather than being a source of financial burden. To ensure that, the following are some ideas that will help you find cheap business interruption insurance:

Pay for your annual premium in advance. 

You could pay monthly or annually when you buy business interruption insurance. Annual premium payments are usually less expensive than monthly payments.

Manage your business risks 

Tech companies that have never filed an insurance claim can expect to pay less for business insurance. While some business interruptions are unavoidable, managing your risks can help you avoid claims. This might include:

  • Have regular building inspections 
  • Improve workplace safety

Buy insurance package bundles

Some insurers sell Business interruption insurance as part of a business owners policy (BOP) or a commercial policy package (CPP). A BOP is a bundled insurance package that includes general liability, commercial property, and business interruption coverage and usually comes at a reduced price. 

Compare several quotes

The only way to make sure you get the cheapest business interruption insurance is to shop around with a few companies or work with a top broker like CoverWallet or Simply Business to compare several quotes to find the cheapest one for your business. Different insurance companies assess risks differently. Don’t settle on the first quote, you’ll leave money on the table.

What is business interruption insurance and how does it work?

Business Interruption Insurance is a specialized policy that protects you when a disaster strikes or an unexpected situation forces you to close the doors of your business. The following are examples of common disasters that could disrupt your business:

  • Tornadoes
  • Hurricanes
  • Major road construction
  • Fires
  • Mudslides
  • Thunderstorms with hail
  • Vandalism

What does business interruption insurance cover?

Business Interruption Insurance, or Business Income Insurance, provides coverage if a company must close due to a disaster or other unforeseen circumstances. This coverage is also beneficial to businesses whose street is closed by the city for major road construction.

Costs typically covered by the policy include the following:

Fixed costs

This policy may cover fixed costs that include daily operating expenses and utilities like water, heating, and cooling.

New/temporary location

If the physical damage to a building is severe enough that working there is dangerous, the company may need to relocate temporarily to get an entirely new place. This policy may cover the cost of a new or temporary location to keep running your business while the old one is being repaired.


you can recoup profits and commissions earned by your business during the period. But then, don’t expect to get paid by inflating numbers and lying to the insurance company. To estimate the amount to pay, you must provide two to three years of business taxes and monthly bank statements to the insurer.

Training costs

If your business is destroyed and rebuilt later, you may not be able to rehire all of your previous employees. Some of your employees may have gotten employment elsewhere. It costs money to train new hires when this happens. This policy may cover you in this regard.

Civil authority ingress and egress

The government or a municipality can impose a street curfew or close a road. If this occurs, customers will be forced to drive further, potentially leading them to your competitors. This could have serious effects on your company’s profits. Depending on your coverage and your insurer, this may also be covered.

Who needs business interruption insurance?

Business Interruption Insurance is required for all business owners, but some require it more than others. If your company location is known for its extreme weather, you already know the weather can cause serious problems for you. Business Interruption Insurance provides peace of mind and total coverage when disasters strike, regardless of how confident you are in your insurance portfolio.

Consider the costs of closing your doors for an extended period. This includes, among other things, paying non-working employees, ruined products, lost profits, temporary location costs, and fixed costs.

Generally speaking, the following people may need business interruption insurance more than others. 

  • A print media publisher who relies solely on his printing machines.
  • A restaurant that relies almost entirely on foot traffic from his town.
  • An IT staffing firm that derives 80% of its revenue from a single client.
  • A retainer accountant for a law firm.

Best business interruption insurance companies

Many companies offer business interruption insurance policies, which can make it a bit confusing to find the best one for your business. We have studied 20+ companies and here are our recommendations of the best business interruption insurance companies for your consideration:

  • CoverWallet: Best for comparing several quotes online
  • Simply Business: Best for finding low-cost coverage
  • The Hartford – Best for Customer Service
  • AIG – Best for Large Engineering Firms
  • Allstate – Best for Add-on Extensions
  • Nationwide – Best for Utility Interruption Coverage
  • Next Insurance – Best for Online Quotes

What business interruption insurance doesn’t cover?

While Business Interruption Insurance is a good policy, it does not cover everything. Most standard policies do not cover the following items:

  • Fake tax returns and bank statements
  • False payroll figures
  • Undocumented earnings that aren’t recorded in your financial records
  • Utilities—because they are usually turned off when a business is being repaired.
  • Infectious diseases that forced your business to close
  • Property damage that would be covered by commercial property insurance
  • Profits if a company fails on its own
  • Items that have been broken as a result of the disaster
Thang Truong
Thang Truong

Thang Truong covers small business insurance and small business success at BravoPolicy. He is a licensed P&C insurance agent. Previously, he held product leadership positions at, Capital One, NerdWallet, and Mulberry Technology. He holds a MBA degree from UC Berkeley - Haas School of Business.

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