Between 40% and 60% of small businesses affected by a disaster never reopen, according to the Federal Emergency Management Agency. Business interruption insurance could help prevent some of these closures, yet only one-third of small businesses carry it, according to Sean Kevelighan, CEO of the Insurance Information Institute.
Business interruption insurance, also called business income insurance, pays the operating costs of a business while it is temporarily shut down. For small businesses, this coverage is typically offered as part of a business owners policy.
Businesses with a physical space or expensive essential equipment are good candidates for business interruption insurance because any damage could jeopardize the business's productivity and survival.
The insurance most commonly covers interruptions caused by fires. Pertinent to the COVID-19 pandemic, business interruption insurance doesn’t cover losses from infectious diseases or government shutdowns not related to property damage.
To create this list of the best business interruption policies, we looked at nearly three dozen insurance companies to identify the best coverage. We evaluated them on coverage specifics, industry experience, financial stability, customer satisfaction, and more. Here are our top picks.
The 6 Best Business Interruption Insurance of 2020
Best Overall: Nationwide
Nationwide covers the broadest range of business interruptions, serves a variety of small business types, and rates highly for both customer satisfaction and financial stability thus becoming our choice for best overall.
Covers a broad range of interruption events
Offers choice of online quotes or quotes from local agents
Highest rankings for customer satisfaction and financial stability
In business since 1926
Not offered in Alaska or Hawaii
Nationwide started in 1926 selling insurance to farmers in Ohio, as Farm Bureau Mutual Automobile Insurance Company. Now, the insurer counts among its customers over half a million small businesses in 48 states and Washington, D.C. It still has deep roots in agriculture, as the largest insurer of farms and ranches in the country.
Nationwide recommends its business owners policy (BOP) for companies with fewer than 100 employees and less than $5 million in sales. The insurer says its cost is determined by how much coverage you need. It promises an online quote in under 30 minutes, or help from a local insurance agent. However, it doesn’t offer insurance in Alaska or Hawaii.
Nationwide’s business interruption policy covers interruptions from fire, wind, hail, vandalism, or damage from vehicles or aircraft. It doesn’t apply to interruptions from floods, earthquakes, or broken glass. It also doesn’t cover partial closures or closures from downed power lines.
Nationwide’s BOP includes more types of insurance than most. BOPs usually include three types of coverage: general liability, business property, and business income. Nationwide’s includes equipment breakdown coverage as well, which is often used in conjunction with business interruption insurance.
For businesses that require more coverage than a business owners policy includes, Nationwide also offers commercial auto, workers' compensation, crime, employment practices liability, cyber liability, errors and omissions, accounts receivable, builders risk, inland marine, and umbrella insurance.
Nationwide won the top honors in the J.D. Power 2019 U.S. Small Commercial Insurance Study, which ranks companies by overall customer satisfaction. It is financially stable, with a rating of A+ (Superior) from AM Best.
Nationwide offers coverage for a broad range of perils along with a stellar reputation and rankings, which is why it edged out the competition for best overall business interruption insurance.
Best for Restaurants: State Farm
State Farm’s tailored policy for restaurants covers a wide range of situations restaurants face and is available in all 50 states.
Offers policies tailored to restaurants
In business since 1922
Holds highest rating for financial stability, and ranks above industry average in customer satisfaction
Must get quote through agent, no online quotes available
In 1922, a retired farmer and insurance salesman named George J. Mecherle established State Farm Mutual Automobile Insurance Company in Bloomington, Illinois. Still headquartered in Bloomington, State Farm is now number 36 on the Fortune 500 list of largest companies and has 2.8 million small business policies in effect.
State Farm is our pick as best for restaurants because it offers a tailored business owners policy for food businesses. In addition to typical covered losses, State Farm’s policy provides income when a restaurant is affected by a sewer or drain backup, food spoilage, or food contamination, including when ordered closed by a board of health or other governmental authority for food contamination. The policy also covers any resulting advertising expenses, making it the most comprehensive for restaurants.
Of course, State Farm can provide business interruption coverage for many small businesses. Its online business directory lists over 200 business types the company serves.
One downside of using State Farm is that online quotes are not available. Policies are sold exclusively through State Farm agents. However, the company has agents available in all 50 states and the District of Columbia, while many of its competitors do not operate in all states.
If a restaurant needs other types of insurance, State Farm also offers commercial liability umbrella, commercial auto, individual health, workers' compensation, small business life, group life, professional liability, errors and omissions, employment practices liability, and disability insurance.
State Farm holds the highest possible rating for financial stability from AM Best, A++ (Superior). It came in above the industry average for customer satisfaction in the J.D. Power 2019 Commercial Small Business Study.
Best for Professional Services: Travelers
Travelers’ specialized policy for professional services covers many common perils, has add-on coverage that offices typically need, and is available nationwide, which helped make it our pick as best for professional services.
Policy covers fire, theft, vandalism, and damage from vehicles
Highest ratings for financial stability
In business since 1864
Quotes available only through agents, not online
Slightly below the industry average in customer satisfaction
Travelers was established in 1864 as a provider of accident insurance for travelers (what we now call travel insurance). Headquartered in Hartford, Connecticut, the company holds an AM Best rating of A++ (Superior) in financial stability, the highest available.
Travelers calls their business interruption insurance Business Income and Extra Expense (BIEE) coverage. Its business owners policy (BOP) includes BIEE coverage, as well as commercial general liability insurance and commercial property insurance.
Its tailored BOP for professional services businesses includes coverage for the loss of valuable papers and records, computer equipment, and data/media, giving it the win in this category. You can add dependent properties coverage, which replaces business income when a major supplier is disrupted, or extended business income coverage, to cover the period after your business opens but customers haven’t fully returned. The policy covers perils such as fire, theft, damage from vehicles, and acts of vandalism.
Travelers can help with other business insurance needs, too. The company offers commercial auto, workers’ compensation, employment practices liability, commercial umbrella, boiler and machinery (equipment breakdown), cyber liability, environmental liability, inland marine, ocean marine, and professional liability insurance.
One potential downside: Travelers didn’t have standout scores in J.D. Power’s 2019 U.S. Small Commercial Insurance Study; it ranked just below the industry average for customer satisfaction.
To obtain a quote, you’ll need to work with an agent who sells Travelers policies; the company does not offer business insurance quotes online. Fortunately, Travelers has agents in all 50 states and the District of Columbia, and their website makes it easy to locate one near you.
Best for Retail Businesses: Farmers
Farmers’ basic policy comes with business interruption coverage, plus it can be customized with other types of coverage that retail businesses need.
Offers coverage periods up to three years
High customer service ratings
Solid rating of A (Excellent) from AM Best
In business since 1928
Not available in all states
Farmers Insurance was started in Los Angeles in 1928 by two men who wanted to sell policies to farmers and ranchers. Now it serves businesses of all kinds, including retail establishments.
A basic Farmers business owners policy includes business income/interruption coverage, along with property insurance and business liability insurance. Notable is the option to have 100% coverage of expected income for up to three years.
In addition, you have the ability to customize the policy with up to 20 different components, called endorsements. A few of these are particularly useful to retail businesses, such as equipment breakdown or replacement of outdoor signage. This flexibility is why Farmers won out in our best for retail businesses category.
The pricing of a Farmers policy varies depending on the risk your business faces and the level of coverage you choose. You can request a quote online or through a Farmers agent. However, business insurance is not offered in Alaska or Hawaii.
If needed, Farmers also can provide business insurance policies for crime (committed by employees or third parties), commercial auto, workers’ compensation, umbrella liability, employee life insurance, cyber liability, employment practices liability, equipment breakdown, spoilage, transportation and cargo, and personal and advertising injury.
Farmers has a solid rating for financial stability: A (Excellent) from AM Best. It’s among the best in customer satisfaction, in a tie for third place in J.D. Power’s 2019 U.S. Small Commercial Insurance Study.
Best for Landscapers: The Hartford
Businesses that care for outdoor spaces—landscapers, lawn care companies, tree trimmers—rely heavily on equipment and can’t afford a disruption to their income. The Hartford’s business interruption policy covers more events than most (fire, wind, and theft) and offers discounts when you bundle it with other insurance that landscapers commonly need.
Basic policy covers fire, wind, and theft
Can choose between online quote or quote from a local agent
Rating of A+ (Superior) from AM Best
In business since 1810
Not available in Alaska, Hawaii, or New Jersey
In business since 1810, The Hartford is interwoven with U.S. history itself. The company provided insurance policies for Abraham Lincoln’s home and the construction of the Golden Gate Bridge, as well as a policy purchased by Babe Ruth to protect against disability. Small businesses are the largest share of The Hartford’s business, and it serves more than one million of them.
The Hartford offers business interruption insurance, which it calls business income insurance, as part of its standard business owners policy, which also includes general liability insurance and business property insurance. Business interruption losses caused by fire, wind, and theft are covered, which is more than some other policies.
Small businesses can also obtain workers’ compensation, commercial auto, professional liability, and cyber insurance from The Hartford. For landscaping businesses specifically, it offers herbicide and pesticide application coverage, as well as snow plow operations coverage for your off-season work, giving it the edge as best for landscapers.
The Hartford’s marks for customer service were below the industry average in J.D. Power’s 2019 U.S. Small Commercial Insurance Study, but it carries a rating of A+ (Superior) for financial stability from AM Best.
The online quote system on The Hartford’s website is easy to use with clear explanations for what information is required. Support via chat and phone is available, too. If you prefer more personalized guidance, the website makes it easy to reach a local agent or request a callback.
The cost of a policy from The Hartford varies depending on your industry, what property you are insuring, how many employees you have, and your claims history. However, you can save by bundling other coverage with a business owners policy.
The Hartford offers business insurance in most, but not all, U.S. states. Alaska, Hawaii, and New Jersey are excluded, though it offers other types of insurance in all three.
Best for Claims Processing: Chubb
Chubb leads the pack in claims processing according to an industry survey and scores well across the board in other metrics such as financial stability and customer satisfaction, making Chubb our top pick for best claims processing.
Highly rated in claims processing
Holds high customer satisfaction ranking
Holds highest rating for financial stability
In business since 1882
Business interruption must be added to basic policy
Quotes available through agents only
Chubb was established in 1882 by a father and son who started insuring ships and cargo in New York City’s seaport district. Today, Chubb is the world’s largest publicly traded property and casualty insurance company. It trades on the New York Stock Exchange and is part of the S&P 500 Index.
More than 500 types of small businesses are eligible for Chubb’s business owners policy. This BOP is designed to be customized to your business, so a basic policy does not include business interruption coverage, but it can be added. Other enhancements include coverage for professional liability, privacy and data breaches, earthquakes, employment practices liability, foreign liability, electronic data liability, equipment breakdown, water backup and sump overflow, and crime.
For your other insurance needs, Chubb also offers workers' compensation, management and professional liability, umbrella insurance, commercial auto, and even a policy for small business owners that operate or travel overseas.
Chubb offers small business insurance in all 50 states, as well as the District of Columbia and Puerto Rico. Quotes are not available online, but you can search for an agent online through Chubb’s directory of independent agents.
As for industry evaluations, Chubb holds an impressive ranking for customer satisfaction—tied for third place—in J.D. Power’s 2019 U.S. Small Commercial Insurance Study. Chubb’s financial stability is rated as A++ (Superior) by AM Best. The reason we chose Chubb as best for claims processing: It scored top marks in this measure by a survey of brokers and risk managers.
What Is Business Interruption Insurance?
Business interruption insurance can provide your business with ongoing income during a temporary closure. It’s closely tied to property insurance so, if your business experiences a loss that’s covered by your property insurance policy and closes temporarily, business interruption insurance kicks in.
The business interruption insurance pays your operating expenses such as rent, mortgage, and payroll until you’re up and running again at your original location, up to a length of time set in your policy. Payroll is typically covered for a shorter time period than other expenses. Some policies also include coverage for extra costs you have related to the closure or setting up at a temporary location.
What Are the Most Common Causes of Business Interruption?
Fires and explosions are the most common causes of business interruption, accounting for 59% of business interruption claims globally.
Every policy can be different, but business interruption insurance typically covers interruptions from fires or theft. Government shutdowns are sometimes covered, but only if resulting from physical damage to property.
Not typically covered are interruptions from floods, earthquakes, volcanoes, terrorism, and infectious diseases (such as COVID-19). However, you can take out additional insurance for some of these risks, particularly flood insurance.
Also of note, business interruption insurance typically doesn’t cover partial closures or lost profits stemming from government orders that limit social or economic activity. Business interruption policies do exist that can apply to losses from government actions taken during a pandemic. However, because they are custom designed and high-cost, they are uncommon.
Does Business Interruption Insurance Apply to the COVID-19 Pandemic?
Business interruption coverage as it relates to COVID-19 is an evolving situation. Hundreds of lawsuits involving business owners suing insurance companies are already underway across the U.S., and several states are considering bills to compel insurance companies to pay business interruption claims they have denied. However, representatives from the insurance industry argue that pandemics are inherently uninsurable, because they affect all customers at once, undermining the shared risk model that makes insurance work.
Can Business Interruption Insurance Be Included in Other Policies?
Yes. In fact, business interruption insurance is only sold in conjunction with other policies. Because it hinges on property insurance coverage, business interruption insurance cannot be purchased on its own.
Small businesses commonly obtain business interruption insurance by purchasing a business owners policy (BOP). BOPs bundle business property insurance with business liability insurance, and they often include business interruption insurance as well.
A BOP can cost less than buying separate property and liability policies, but business owners should read the combined policy closely to confirm that the coverage meets their needs.
How Do You Handle a Business Interruption Claim?
Your first step is to notify your insurance company promptly. Throughout the claims process, you will work with an adjuster provided by your insurer, who processes your claim and looks for ways to help your business recover and generate revenue as soon as possible.
You’ll want to familiarize yourself with the coverage limits of your business interruption policy. Usually, these will be spelled out on a “declarations page” early in the document.
As part of your business interruption claim, you’ll need to prove your pre-loss income and expenses. Examples of common supporting documents are: past financial statements (one to two years), revenue projections, payroll records, business tax returns, property and equipment leases, vendor contracts, customer contracts or orders (especially orders canceled due to the closure), and inventory records. Don’t discard any financial documentation you have, even if it’s partially damaged.
If your policy also includes coverage for extra expenses, as many do, keep any documentation of new expenses that you wouldn’t have otherwise. Examples include: employee overtime, moving equipment or services, cleaning services, protective equipment, security for the damaged property, storage space, rent at a temporary location, and advertising or marketing to announce the closure and relocation.
Because many events that cause business interruption may also destroy financial records, it’s smart to keep duplicate copies of key documents in a second location or in cloud storage.
What Are the Costs of Business Interruption Insurance?
To compare costs, we used pricing for business owners policies that contain business interruption insurance. The lowest annual premiums are around $250, and premiums can increase to $1,200 or higher for more complex small businesses.
How We Chose the Best Business Interruption Insurance
We examined 35 business interruption insurance providers to identify the best options. To determine the final list of companies, we weighed factors such as policy coverage and industry experience. We also considered each company’s financial stability and customer satisfaction, as scored by AM Best and J.D. Power, respectively.
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Insurance Information Institute. "Business Interruption Coverage: Are Policyholders Being Left Behind?" Accessed July 12, 2020.
J.D. Power. "Small Business Commercial Insurance Customer Satisfaction Reaches All-Time High Thanks to Investments in Digital, Servicing and Product Expansion, J.D. Power Finds." Accessed August 3, 2020.
Advisen. "2020 Claims Satisfaction Survey Report." Accessed August 10, 2020.
Allianz Global Corporate and Specialty. "Business Interruption Insurance Trends." Accessed July 17, 2020.
Insurance Journal. "COVID Business Interruption Suits Top 700. Yep, That’s A Lot." Accessed August 10, 2020.
Insureon. "How much does a business owner’s policy cost?" Accessed August 10, 2020.
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