What business interruption insurance is
Business interruption insurance, also called business income coverage, is time-element insurance. The California Department of Insurance commercial insurance guide says time-element coverage responds to other losses that stem from a direct loss by a covered peril to business property, and that business interruption coverage replaces lost business income after a covered loss.
The Department's FAQ on business interruption describes it as optional coverage that may be purchased with a multi-peril commercial policy. It says coverage typically applies only when direct physical loss or damage from a covered peril suspends operations. Not every commercial policy includes it. The FAQ says virus and similar exclusions are common, and that each policy has to be read on its own. This page does not promise that a shutdown will be paid.
Extra expense, which the same guide lists beside business interruption, is the cost of keeping the business operating after a covered loss, such as temporary space or rented equipment. It is usually added to a commercial property policy or a business owner's policy, not written as a substitute for those policies. The product page is business interruption insurance.
Questions
What is business interruption insurance?
Time-element coverage that, as the California Department of Insurance describes it, replaces lost business income after a covered loss to business property. It is optional and is not on every commercial policy.
Does a shutdown by itself trigger it?
The Department's FAQ says it typically applies only when direct physical loss or damage from a covered peril suspends operations. Causes the policy does not list, and exclusions the policy does list, are not paid. Read the form.
Where does it sit on a policy?
Usually on a commercial property policy or a business owner's policy. The product page is business interruption insurance. Extra expense, for temporary space and similar costs, is the related form the CDI guide lists beside it.
Sources
- California Department of Insurance, Commercial Insurance Guide (checked October 13, 2026). Time-element coverage. Business interruption replaces lost business income after a covered loss. Extra expense is listed beside it.
- California Department of Insurance, FAQ on Business Interruption Insurance (checked October 13, 2026). Optional coverage on a multi-peril policy. Typically requires direct physical loss from a covered peril. Not on every policy. Policies differ.
Related: Glossary · Business interruption insurance · Business owner's policy · Esta página en español.