What type of policy covers lost income due to interruption of business operations?

Business interruption insurance is specifically designed to cover lost income that a business may experience due to a temporary interruption of operations, often caused by a covered peril such as fire, natural disasters, or other events that damage physical property. This type of insurance helps to replace lost revenue and cover ongoing expenses like rent or salaries during the period when the business cannot operate, thereby allowing business owners to maintain financial stability.

In contrast, workers' compensation insurance provides benefits to employees who are injured or become ill as a result of their job, and does not cover lost income due to operational interruptions. Property insurance protects the physical assets of a business from losses due to specific risks, but it does not compensate for the loss of income resulting from those losses. Liability insurance covers legal responsibility for injury or damage to others, not the financial impact of interrupted business activities. Each of these policies serves a distinct purpose, but business interruption insurance is uniquely tailored to address the financial consequences of disruptions in business operations.