Unexpected events like wildfires, hailstorms, power outages, and supply chain disruptions can bring Colorado businesses to a halt. Without a steady income, many businesses struggle to recover after a disaster. That’s where business interruption insurance comes in—it helps cover lost revenue and operating expenses while your company gets back on its feet. Here’s what Colorado business owners need to know about this essential coverage.
What is Business Interruption Insurance?
Business interruption insurance compensates businesses for lost income and extra expenses when operations are disrupted due to a covered event. It is typically included in a Business Owner’s Policy (BOP) or can be purchased as a stand-alone policy.
This coverage is crucial for businesses that:
- Rely on physical storefronts or facilities to operate.
- Depend on a supply chain that could be disrupted.
- Would struggle to pay fixed costs without revenue.
What Does Business Interruption Insurance Cover?
If your business is forced to temporarily close due to a covered disaster, business interruption insurance helps pay for:
- Lost Revenue
- Covers income your business would have earned if it had remained open.
- Based on historical financial records and projected earnings.
- Operating Expenses
- Covers rent, lease payments, and utilities while your business is closed.
- Pays employee wages so you can retain staff during downtime.
- Temporary Relocation Costs
- Covers the cost of moving to a temporary location to continue operations.
- Includes expenses for renting new office or retail space.
- Loan & Debt Repayments
- Ensures that businesses can continue paying off loans and financial obligations.
What Disasters Are Covered?
Business interruption insurance typically covers closures caused by:
✔ Fire or wildfire damage
✔ Wind and hailstorms
✔ Burst pipes or water damage
✔ Vandalism or theft
What’s NOT Covered?
🚫 Pandemics & COVID-19-related shutdowns (most policies exclude viruses).
🚫 Flood damage (requires a separate flood insurance policy).
🚫 Earthquakes (needs an earthquake rider or stand-alone policy).
🚫 Power outages not caused by a covered peril.
Real-Life Example: Colorado Business Hit by Wildfire
In 2021, the Marshall Fire in Boulder County destroyed over 1,000 homes and businesses, forcing companies to close for weeks. Businesses with business interruption insurance were able to:
✅ Recover lost income during closures.
✅ Pay employees instead of laying them off.
✅ Cover rent while rebuilding their properties.
Without coverage, many businesses faced severe financial hardship and struggled to reopen.
How Much Does Business Interruption Insurance Cost?
Premiums vary based on:
- Industry risk level (restaurants and retail businesses pay more than offices).
- Revenue and payroll size (higher revenue businesses pay more).
- Coverage limits (higher limits = higher premiums).
Most small businesses pay $500 to $1,500 per year for business interruption coverage.
How to Make a Business Interruption Claim
If your business is forced to close due to a covered event, follow these steps:
- Document the damage with photos and videos.
- Gather financial records to prove lost revenue (tax returns, profit/loss statements).
- Notify your insurer immediately to begin the claims process.
- Keep detailed expense records for temporary relocation and extra costs.
- Work with an insurance adjuster to get a fair settlement.
Final Thoughts
Business interruption insurance is a lifesaver for Colorado businesses affected by wildfires, hailstorms, and property damage. It helps cover lost income, operating expenses, and employee wages while you rebuild. Without it, businesses risk financial ruin after an unexpected disaster. Review your policy today and ensure you have the right protection in place.
