When a disaster strikes, physical damage is just the beginning. For many businesses, the bigger challenge is the disruption to operations, revenue, and customer trust. Business Income (BI) coverage—often misunderstood or overlooked—has emerged as a critical tool for ensuring resilience. From hurricanes and wildfires to supply chain breakdowns, real-world events have proven that companies with the proper protection and planning can not only survive but also recover faster and stronger.
Here, we explore how BI coverage, combined with a robust business continuity plan, helps minimize downtime, safeguard cash flow, and provide the financial breathing room necessary to move forward. We’ll also take a look at Professional Fees coverage and close with a couple of real-world case studies.
Business continuity planning is often the first—and most overlooked—step in minimizing loss.
According to FEMA and risk resilience data:
A continuity plan provides a road map for reacting to threats such as fire, cyberattack, or weather events. It outlines alternative work sites, vendor agreements, data backups, and temporary staffing strategies. Business continuity planning should also include current financial records, vendor contracts, and updated contact information, as these resources become critical when filing a Business Income claim. Without this documentation, validating the loss and receiving timely payment can be significantly delayed.
Business Income insurance (often called Business Interruption insurance) covers lost income when operations are halted due to a covered physical loss. When added to a property policy, it can provide coverage for:
Though too often overlooked, Professional Fees coverage is critical for navigating complex Business Income and Extra Expense claims. This coverage reimburses costs for services provided by professionals (e.g., accountants) to accurately document and validate claims following a covered loss.
It ensures businesses can afford expert assistance in order to:
Business Income claims require detailed financial documentation — such as profit and loss statements, tax returns, and sales records — to prove lost revenue. Professional Fees coverage allows businesses to hire forensic accountants and other experts to perform these calculations, reducing the risk of underinsurance or claim denials.
Similarly, for Extra Expense claims, the coverage supports the documentation of costs incurred to minimize downtime, such as costs related to temporary facility rental.
Professional Fees coverage typically carries a sublimit (e.g., $25,000–$100,000) that is separate from the policy’s overall limit. It may require pre-approval for certain services.
When Hurricane Ian struck the Gulf Coast, a regional plastics manufacturer suffered significant wind damage and power outages that halted operations for nearly three weeks. Its BI policy paid out for lost income and allowed the company to cover fixed costs. What made the difference, however, was the extra expense endorsement, which allowed the manufacturer to lease a temporary warehouse and keep supply chain commitments on track.
“Had we not invested in those additional coverages, we likely wouldn’t have fulfilled our largest Q4 contract,” said the CFO. “It bought us time and options.”
A western U.S.-based retail chain faced evacuation orders and road closures after a fast-moving wildfire swept through its community. Though only one of its 12 stores sustained actual fire damage, several others were cut off by mandatory evacuations and experienced significant foot traffic loss.
Its civil authority coverage proved invaluable. The insurer reimbursed lost revenue for stores that couldn’t operate, even in the absence of direct property damage.
“People think it’s just about rebuilding,” noted the COO. “For us, it was about making payroll and staying visible in the community while we were temporarily shut down.”
One manufacturing client faced a significant delay when its overseas supplier was shut down by flooding. Thanks to Contingent BI coverage, it was able to recoup losses while sourcing alternate suppliers.
Since Business Income policies can differ significantly, it is important to understand the policy terms, including exclusions, coverage limits, and waiting periods.
Businesses should review their policies annually to ensure their limits reflect current operating costs and projected revenue. A limit set years ago may no longer be adequate, especially for growing companies.
Business Income insurance is more than a policy; it’s part of an overall critical operational strategy. Combined with a continuity plan, it equips businesses with the tools to:
As climate risks, infrastructure fragility, and supply chain volatility increase, BI coverage and strategic planning will only become more vital.
Doug Hall is a Senior Claim Account Executive with McGriff. With over 25 years of experience, Doug advises large commercial clients on disaster recovery and complex business interruption claims. His career includes significant claim consulting work on hurricanes, wildfires, and systemic supply chain disruptions.
Doug Hall
Senior Claim Account Executive
