Business Interruption & Income Insurance Calculator
Use our free 2026 business interruption insurance calculator to estimate your coverage needs. Calculate lost income, fixed expenses, and payroll protection instantly. Perfect for creating your business income worksheet and planning for financial survival during disruptions.
Rent, utilities, equipment leases, etc.
Complete the form and click "Calculate My Coverage" to see your results
Calculating your business interruption coverage needs requires analyzing your financial statements and understanding your risk exposure. The goal is to determine how much coverage you need to survive a shutdown and return to normal operations.
Key Components of Your Calculation:
1. Revenue Loss
Calculate your average weekly revenue and multiply by expected downtime weeks. This represents the income you'll lose while closed.
2. Fixed Costs
Include rent, utilities, insurance premiums, loan payments, and other expenses that continue during closure. These don't stop just because you're closed.
3. Payroll Obligations
Consider whether you'll retain key employees during the shutdown. Many businesses need to keep essential staff to maintain customer relationships and prepare for reopening.
4. Recovery Period
Factor in the time needed to return to normal operations after reopening. It often takes weeks or months to rebuild customer base and restore full revenue.
Add these components together and include a 20% safety buffer to account for unexpected expenses or longer recovery times. Use our calculator above to get a detailed estimate based on your specific business financials.
A business income worksheet is a standardized document used by insurance agents and brokers to calculate your business interruption coverage needs. It's essentially a financial snapshot that helps determine how much coverage you should purchase.
Typical Business Income Worksheet Includes:
- • Average Monthly Revenue: Your typical monthly income from operations
- • Operating Expenses: Total monthly costs to run your business
- • Fixed Costs Percentage: What portion of expenses continue during closure
- • Payroll Costs: Monthly employee compensation expenses
- • Expected Downtime: How long you expect to be completely closed
- • Recovery Period: Time needed to return to normal operations
- • Seasonal Adjustments: Variations in revenue throughout the year
Our calculator above functions as a digital business income worksheet, helping you estimate your coverage needs before meeting with an insurance agent. Having this information prepared can help you get more accurate quotes and better coverage recommendations.
The indemnity period is one of the most critical aspects of business interruption insurance. It's the maximum length of time your policy will pay benefits after a covered loss occurs.
Downtime Period
The period when your business is completely closed and unable to operate. This is when you experience the most significant financial impact.
Example: 4-8 weeks for fire damage repairs
Recovery Period
The time it takes to rebuild your customer base and return to pre-loss revenue levels after reopening.
Example: 8-12 weeks to restore full operations
Understanding the difference between fixed and variable costs is crucial for accurately calculating your business interruption coverage needs. Business interruption insurance typically covers fixed costs that continue during closure, but not variable costs that stop when you're not operating.
Fixed Costs (Covered)
- • Rent or mortgage payments
- • Property insurance premiums
- • Utilities (if required to maintain property)
- • Equipment leases
- • Loan payments
- • Property taxes
- • Key employee payroll
Variable Costs (Not Covered)
- • Raw materials and inventory
- • Sales commissions
- • Shipping and delivery costs
- • Marketing and advertising
- • Temporary employee wages
- • Utilities that stop when closed
- • Cost of goods sold
When calculating your coverage needs, focus on fixed costs that will continue even if your business is closed. These are the expenses that can drain your cash reserves during a shutdown and are typically covered by business interruption insurance.
Business Interruption Insurance (also called Business Income Insurance) is a type of coverage that protects your business from financial losses when you're forced to temporarily close or reduce operations due to a covered event like fire, natural disaster, or equipment failure.
Unlike property insurance, which covers physical damage to your building and equipment, business interruption insurance covers the income you lose and the expenses you still have to pay while your business is closed or recovering.
Key Points:
- • Covers lost revenue and ongoing expenses during shutdown
- • Typically triggered by physical property damage from a covered peril
- • Pays for the period until your business is reasonably restored
- • Usually costs 5-10% of your property insurance premium
- • Essential for businesses that would struggle during extended closures
How do you calculate business interruption insurance?
To calculate business interruption insurance, you need to determine your lost revenue (average monthly revenue × downtime weeks), ongoing fixed costs (rent, utilities, loan payments), payroll obligations, and recovery period costs. Add these together and include a 20% safety buffer. Use our calculator above to get a detailed estimate based on your specific business financials.
What is covered under business interruption insurance?
Business interruption insurance typically covers lost profits or revenue, fixed operating expenses (rent, utilities, insurance, loan payments), payroll for key employees, taxes, extra expenses to speed recovery, and relocation costs if needed. It does not cover physical property damage (that's property insurance), pandemic-related closures unless specifically endorsed, or flood damage unless you have separate flood coverage.
What is the difference between business income and business interruption?
Business income and business interruption are often used interchangeably, but there's a subtle difference. Business income insurance specifically covers lost net income (revenue minus expenses that would have been incurred). Business interruption is a broader term that can include both income loss and extra expenses. In practice, most policies use 'business income' as the technical term, while 'business interruption' is the more commonly used marketing term.
How long does business interruption insurance pay out?
Business interruption insurance typically pays out for the period of restoration, which includes both the downtime (when your business is completely closed) and the recovery period (when you're back open but not yet at full capacity). Most policies cover up to 12 months, but you can purchase extended periods. The coverage continues until your business is reasonably restored to its pre-disaster condition or until the policy limit is reached, whichever comes first.
Does business interruption insurance cover payroll?
Yes, business interruption insurance can cover payroll, but it depends on your policy. Some policies include payroll coverage automatically, while others require you to add it as an endorsement. Typically, policies cover payroll for key employees you need to retain during the shutdown. You may need to choose between covering all payroll or just essential staff. Check your policy or discuss with your agent to understand your specific coverage.
What is a business income worksheet?
A business income worksheet is a document used to calculate your business interruption insurance coverage needs. It typically includes your average monthly revenue, operating expenses, fixed costs percentage, payroll obligations, expected downtime, and recovery period. Insurance agents use these worksheets to determine appropriate coverage limits. Our calculator above functions as a digital business income worksheet, helping you estimate your coverage needs before meeting with an agent.
Is business interruption insurance worth it for small businesses?
Yes, business interruption insurance is often worth it for small businesses, especially those that would struggle to survive a prolonged shutdown. Small businesses typically have less cash reserves than larger companies, making them more vulnerable to extended closures. The cost is usually 5-10% of your property insurance premium, which is relatively affordable. If a fire, natural disaster, or other covered event forces you to close for weeks or months, this coverage can be the difference between reopening and permanent closure.
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