Scale strong › Revenue protection
What happens if you can't trade for weeks?
Business Interruption insurance covers lost revenue when insured events stop you from operating. Here’s when you need it, what it covers, and whether it’s worth the cost.
What is Business Interruption insurance?
Business Interruption (BI) covers lost income and ongoing expenses if you can’t trade due to an insured event, fire, flood, storm damage, theft, or other covered incidents.
The concept: If a fire destroys your cafe and you can’t trade for 3 months, BI pays you as if you were still trading, covering lost income and keeping your business alive while you rebuild.
What it covers:
- Lost revenue during downtime
- Fixed costs that continue even when you're not trading (rent, salaries, loan repayments)
- Temporary relocation costs (if you need to move while repairs happen)
- Additional expenses to get back up and running faster
What it doesn't cover:
- Downtime from non-insured events (e.g., pandemics, unless specifically included)
- Loss of revenue from market changes, bad management, or economic downturns
- Voluntary closure
When do you need Business Interruption insurance?
You need it if:
- Your business depends on a physical location (shop, office, warehouse)
- You couldn’t afford to cover lost revenue and fixed costs from your own reserves
- You have ongoing commitments (rent, salaries, loan repayments) that don’t stop if you close
- Downtime of more than a week would seriously hurt your business
You probably don't need it if:
- You’re home-based with low overheads
- You have substantial cash reserves to cover months of downtime
- Your business is entirely digital and can operate from anywhere
- You’re a sole trader with no fixed costs or employees
How Business Interruption insurance works
It's usually an add-on
You can buy BI on its own, but it’s typically added to your Business Property policy. You need Material Damage cover first (fire, theft, storm), then BI covers the income loss that results.
You choose an indemnity period
This is the duration for which the policy will pay, typically 12, 18, or 24 months. Choose based on how long it would realistically take to rebuild or relocate and get back to normal trading levels.
You nominate a sum insured
This is your estimated revenue for the indemnity period, plus fixed costs. Under-insuring here is common and costly.
Should you add Business Interruption cover?
Add it if:
- You’re location-dependent
- You have staff and fixed costs
- Downtime would financially cripple you
Skip it if:
- You’re home-based with minimal overheads
- You have strong cash reserves
- You can easily operate from anywhere
Common questions
From growing businesses
Can I claim if I voluntarily close due to nearby construction?
No. BI only covers involuntary closure due to insured events.
What if I can partially trade from another location?
Does BI cover cyber incidents that shut down my systems?
How do I prove my lost revenue?
Useful resources for founders starting smart
Guides:
Insurance When You Hire Your First Employee – What changes and what you need
How Much Coverage Do You Actually Need? – Decision framework for limits
What happens next
Once you’re launched and making sales, your needs will change. As you grow, you’ll add team members, increase revenue, and take on bigger risks. That’s when you move from Start Smart to Scale Strong.