Unexpected disruptions can bring even the most successful businesses to a standstill. Natural disasters, fires, flooding, vandalism, or even widespread events like the COVID-19 pandemic can disrupt normal operations and lead to severe financial losses. That’s where business interruption insurance comes in—a critical form of coverage that many business owners overlook until it’s too late.
At PALUMBO LAW, we help Rhode Island business owners understand their insurance coverage, evaluate their losses, and fight for fair compensation when their claims are wrongfully denied or delayed. Here’s what you need to know about business interruption insurance and why it matters.
What Is Business Interruption Insurance?
Business interruption insurance—also known as business income coverage—is designed to help cover lost income and operating expenses when a covered event temporarily forces your business to close or limits your ability to operate normally.
Unlike property insurance, which covers physical damage to your building or equipment, business interruption insurance focuses on lost revenue and ongoing expenses while your business recovers.
What Does Business Interruption Insurance Cover?
While every policy is different, business interruption coverage typically includes compensation for:
- Lost income based on previous financial records
- Fixed expenses such as rent, utilities, and loan payments
- Employee wages to retain your workforce during the closure
- Temporary relocation costs if your business must operate from a new location
- Training costs for staff if new equipment must be used after reopening
- Taxes and other recurring operating costs
- Loan payments that continue during downtime
The coverage period usually begins after a waiting period defined in the policy and continues until the business resumes normal operations or reaches the policy’s time limit (often 12 to 24 months).
It’s important to note that business interruption insurance is not a standalone policy—it’s typically added to a commercial property or business owner’s policy (BOP).
Which Businesses Should Have Business Interruption Insurance?
Virtually every business with a physical location or reliance on in-person operations can benefit from business interruption insurance. This includes:
- Retail stores and restaurants that rely heavily on foot traffic
- Manufacturers and warehouses where equipment or supply chain issues can halt production
- Professional offices such as law firms, medical practices, or accounting firms
- Hotels and hospitality businesses that lose income when forced to close
- Salons, gyms, and service providers that depend on physical space and customer interaction
In Rhode Island, where weather-related damage (from nor’easters or hurricanes) and unexpected property incidents are not uncommon, this coverage can be a lifeline to recovery.
Common Exclusions and Limitations
Unfortunately, not all business interruptions are covered by insurance. Common exclusions may include:
- Pandemics or viral outbreaks (unless specifically added by rider)
- Utility outages not caused by direct physical loss
- Government-mandated shutdowns unrelated to property damage
- Gradual wear and tear or maintenance-related closures
- Losses that fall outside the designated coverage period or geographic scope
These exclusions have become especially important in recent years, as many businesses have discovered that their policies do not cover pandemic-related losses.
What If My Claim Is Denied or Delayed?
It’s not uncommon for insurers to delay, underpay, or outright deny valid business interruption claims, especially following widespread disasters when many businesses file at once.
If your business interruption claim is denied, delayed, or undervalued, you should:
- Review your policy carefully to understand your specific coverage and exclusions.
- Document all losses with financial records, photos of damage, business forecasts, and written estimates from contractors or accountants.
- Keep detailed records of communications with your insurance company, including claim numbers, adjuster names, and emails.
- Avoid signing waivers or lowball settlement agreements without consulting legal counsel.
- Contact an attorney who can advocate for your rights and help recover the compensation you’re owed.
At PALUMBO LAW, we represent Rhode Island business owners in insurance disputes of all kinds, including business interruption claims. We’ll help you understand your policy, build a strong claim, and push back against unreasonable denials or bad faith practices.
Why Choose PALUMBO LAW?
Insurance companies often rely on policy complexity and vague language to minimize payouts. As an experienced Rhode Island law firm handling property and insurance claims, PALUMBO LAW knows how to interpret coverage language and hold insurers accountable.
Whether you’re filing your first claim or dealing with a dispute, our legal team will help you navigate the process, protect your business, and pursue maximum recovery under your policy.
Contact PALUMBO LAW Today
Business interruption insurance can mean the difference between bouncing back and shutting down after a crisis. But when your insurer doesn’t honor the terms of your policy, your business can suffer even more. If your Rhode Island business has experienced an interruption and you’re struggling with your insurance claim, PALUMBO LAW is here to help.
Contact us today to schedule a consultation and get the experienced legal support your business deserves.
