Business Income Coverage Calculator
Business income (BI) pays your fixed costs and lost profit while you rebuild after a covered loss. Different from property coverage. Most BOPs underfund this.
Your business
Materials, inventory, direct labor on production. Excludes overhead.
Rent or mortgage, insurance, utilities (minimum service), loan payments, accounting/legal. Roughly fixed regardless of revenue.
Restaurant fire: 6-12 months. Office water damage: 3-6 months. Major manufacturing rebuild: 12-18 months. Be realistic.
Recommended BI coverage
$360,000
Coverage limit you should request. Most carriers default BOP business income to a co-insurance percentage of annual gross profit; ask your agent to confirm or switch to actual-loss-sustained (ALS) for 6 months.
Math breakdown
Why BI is the most-underfunded business coverage we see
Most BOPs (business owner's policies) include business income as a default sublimit at 12 months of "gross earnings" with co-insurance. In practice that calculation almost always lands below what an owner actually needs because:
- Months-to-rebuild is underestimated. A restaurant fire takes 8-12 months to fully reopen, not 3-6. Permits, equipment lead times, and contractor scheduling all stack up.
- Payroll continuation matters. If you don't keep key employees, you won't have a team to reopen with. The 25% multiplier above is the common range.
- Co-insurance penalties. Default BOP BI limits often have an 80% co-insurance clause; under-buy and the claim payment gets prorated at the worst possible time.
When to switch to actual-loss-sustained (ALS)
ALS endorsements pay actual losses for a defined period (often 12 or 24 months) without a dollar cap. Better for businesses where rebuild time is uncertain or where the dollar cap would run out before reopening. Costs ~10-30% more than standard BI. We see ALS used most by restaurants, manufacturing, and professional services with key-person dependencies.
Extra expense coverage
Separate from BI but always quoted together: extra expense pays for things you do above and beyond normal operations to keep the business going (temporary location rental, expedited equipment shipping, overtime to catch up). Most TCDS commercial quotes default to 25-50% of BI as extra expense; ask for the math.
