Business interruption insurance

Definition

Cover replacing lost income while a closed business gets back on its feet.

Why It Matters

A fire or a flood stops the revenue but not the loan payment, and this is the policy that bridges the two. It matters more on a leveraged acquisition than it did for the seller who owned the place outright, because a debt schedule does not pause for a rebuild. Read the waiting period and the maximum indemnity period rather than the limit alone: a policy that starts paying after 72 hours and stops after 12 months is a different promise from one that starts at 24 and runs 24.

In numbers: A business earning $500k of SDE and paying about $8,000 a month in debt service needs cover for both, so a 12-month indemnity period at $45,000 a month of gross earnings is the shape to ask for.