Business Interruption Loss Calculator

Business interruption insurance (also called business income coverage) pays for lost net income and continuing operating expenses during the period your business is suspended due to a covered property loss. Covered expenses typically include rent or mortgage, key employee payroll, insurance, loan payments, utilities, and other fixed costs that continue while you are closed. BI coverage requires a covered physical loss to trigger — it doesn't pay for downtime caused by a pandemic, economic conditions, or non-covered perils.

The standard formula is: lost revenue during the period of restoration, minus expenses saved because of the shutdown, plus any extra expenses incurred because of the loss, minus the waiting period deductible. Carriers and forensic accountants use either the top-down (gross receipts) method or the bottom-up (net income) method. Both should produce the same number on a properly documented claim. Accurate calculation requires your pre-loss P&L, trailing 12-month revenue, fixed vs. variable expense classification, and a documented period of restoration.

The period of restoration is the length of time the BI coverage pays on — beginning on the date of the covered loss (or after the waiting period), and ending on the earlier of when the damaged property should reasonably be repaired or when the business resumes operations. Most policies cap the period of restoration at 12 consecutive months. Extended business income coverage can add 30-90 days beyond that for revenue that hasn't yet returned to pre-loss levels.

Yes, but which payroll depends on the policy and your choices. Key employee payroll (salaried executives, critical technical staff) is almost always covered as a continuing operating expense. Ordinary hourly payroll is often limited to a specified number of days (30, 60, or 90) unless you carry full payroll coverage or elect ordinary payroll as a covered expense. Carriers will challenge any payroll paid to employees who weren't actively working — so document what each employee did during the shutdown.

Continuing expenses are fixed costs that keep running whether you're open or closed — rent, insurance, loan payments, salaried payroll, property taxes, essential software. These are reimbursable under BI coverage. Saved expenses are variable costs that stop when you shut down — raw materials, inventory costs, hourly wages for furloughed staff, shipping, variable utilities. These reduce the claim because you didn't actually spend the money. Properly classifying every expense on your P&L as continuing or saved is one of the most important parts of a BI claim.

Yes, and BI claims are underpaid more often than almost any other commercial claim type. Common tactics include understating lost revenue by ignoring growth trends, inflating saved expenses to reduce the net loss, aggressively shortening the period of restoration, disputing whether certain payroll was truly "continuing," and refusing to pay on extra expenses. A properly documented claim with a forensic accounting workup is usually necessary to push back. A licensed public adjuster working with a forensic accountant can typically recover 20-40% more on a disputed BI claim.

Yes. The formula used by this tool applies to businesses of any size — a restaurant, retail store, medical practice, manufacturer, or HOA with a damaged clubhouse all use the same calculation framework. The accuracy of the estimate depends on the quality of the numbers you enter. For smaller businesses without a formal P&L, the trailing 12-month bank deposit totals and QuickBooks expense reports are usually enough to produce a defensible estimate. For claims over $100,000, a forensic accounting workup is usually worth the investment.