WHAT IS 'Use and Occupancy Insurance – U&O'

Use and occupancy insurance, or U&O, is an obsolete name for what is now called business interruption insurance or business income coverage. It is a type of insurance that covers against the loss of use of machinery or property due, and the loss of income from this, to damage resulting from a named peril or hazard, such as a fire or natural disaster. Use and occupancy insurance provides certain coverage through endorsements to property/casualty insurance policies if the equipment or property can no longer be used. 

BREAKING DOWN 'Use and Occupancy Insurance – U&O'

Use and occupancy insurance (U&O), now known as business interruption insurance or business income coverage, is insurance that reimburses the policyholder for lost business income when a covered incident makes the business location or equipment unusable. Covered incidents include situations like fires, floods, hurricanes and other disasters that are written into the policy. If a disaster or situation occurs that makes the business location or equipment unusable but this disaster is not written into the insurance coverage, insurance will not pay for the lost business income.

U&O can pay for a specific amount of lost income that is written into the policy and calculated by the policyholder and the agent who sells the policy based on records of the business income. This type of insurance policy can also pay the insured on a valued basis, or a specified, fixed amount, for each day that the insured is not able to use or occupy the covered property because of an insured peril. The amount that is payable can be determined by reviewing past financial records of the business. It is also possible to continue coverage past the date at which the location or equipment are deemed usable again, but this must also be written into the policy.

Use and Occupancy Insurance vs Property Insurance

Use and occupancy insurance, or business interruption insurance, and property insurance are both taken out on businesses and business locations. However, property insurance only covers the actual physical property, including the location, grounds, equipment, supplies and merchandise of the business. Business interruption insurance, in contrast, covers the loss of income from the operations of the business if the property damage forces the business to suspend operations. Having business interruption insurance in an emergency can keep a business operating by paying for fixed costs such as rent, electricity and business licenses while the location and property are being repaired and restored to functionality.

  1. Business Interruption Insurance

    Business interruption insurance is a form of insurance coverage ...
  2. Business Insurance

    Business insurance coverage protects businesses from losses due ...
  3. Commercial Lines Insurance

    Commercial lines insurance helps keep the economy running smoothly ...
  4. Total Insurable Value

    Total insurable value (TIV) is the value of property, inventory, ...
  5. Insurance Premium

    An insurance premium is the amount of money that an individual ...
  6. Assessable Policy

    Assessable Policy is a type of insurance policy that may require ...
Related Articles
  1. Insurance

    How To Easily Understand Your Insurance Contract

    Understanding your insurance contracts can go a long way in making sure that your advisor's recommendations are on track. Learn how to read yours today.
  2. Insurance

    What Is and Isn't Covered by Homeowner's Insurance

    Understanding what your insurance covers can be confusing. Learn what almost all insurance policies have in common so you're prepared if disaster strikes.
  3. Insurance

    12 Insurance Questions for High Net Worth Families

    High net worth families should ask themselves these 12 questions regarding comprehensive insurance.
  4. Insurance

    The History of Insurance in America

    Insurance was a latecomer to the American landscape, largely due to the country's unknown risks.
  5. Insurance

    How To Invest In Insurance Companies

    Knowing the special circumstances that insurance companies operate under helps in evaluating whether or not a listed insurance company is a good investment and whether the economic environment ...
  6. Insurance

    How Much Life Insurance Should You Carry?

    Before purchasing life insurance it is important to decide if you really need it, what type of policy is best, and how much coverage you should get.
  7. Insurance

    15 Insurance Policies You Don't Need

    Learn how to save money by saying "no" to unnecessary coverage.
  8. Insurance

    Insurance, Excess Insurance and Reinsurance: What's the Difference? (ALL)

    Understanding the differences might help you avoid being overinsured or underinsured.
  1. What are insurance sector companies usual profit margins?

    Understand what the average profit margin for a company that serves in the insurance sector and what factors can affect the ... Read Answer >>
  2. Can an Insurance Company Deny Coverage?

    Insurance isn't always as straightforward as other products, and insurers can deny coverage in many different instances. ... Read Answer >>
  3. How does the insurance sector work?

    Learn more about the insurance sector, a historically safe place for equity investors and the home of some of the largest ... Read Answer >>
Trading Center