Under a businessowners policy, what time limit applies to the loss of earnings?

In a businessowners policy (BOP), the coverage for loss of earnings, often referred to as business income coverage, is designed to help insured businesses recover lost income due to covered causes of loss that interrupt their normal operations. The specific time limit of 12 months is set for the period of restoration—this is the duration for which the business can receive compensation for lost income while they work to resume operations.

The 12-month limit is significant because it strikes a balance between providing sufficient time for recovery after a devastating event, such as a fire or natural disaster, while also encouraging business owners to promptly restore and resume their operations. This coverage typically begins after a waiting period following the loss and continues until the business is able to reopen or until the coverage limit is reached, which can be essential for the survival and continuity of the business.

This time frame helps ensure that business owners can plan and manage their operations effectively in the aftermath of a disaster, while also acknowledging that longer periods of loss of income could indicate other underlying operational issues that need to be addressed.