Business Interruption Insurance Calculator
Business interruption (BI) insurance replaces lost income and covers ongoing fixed expenses when a covered physical loss stops your operations. The industry-standard ISO form CP 00 30 defines the covered loss as net income plus continuing fixed expenses during the indemnity period. This calculator uses your annual gross revenue, cost of goods sold, variable expenses, and fixed operating costs to estimate your required BI coverage limit for your chosen indemnity period.
Business interruption coverage formula (ISO CP 00 30)
Gross Earnings = Revenue - COGS - Variable Expenses
Monthly Gross Earnings = Gross Earnings / 12
BI Coverage = (Monthly Gross Earnings x Indemnity Months) + Extra Expense
The gross earnings basis captures what the business would have earned net of direct production costs, plus all fixed costs that must still be paid whether operations continue or not. This is the standard used by ISO form CP 00 30, the most common commercial property form in the US.
Indemnity period guidance
- Simple retail or service business: 6 to 12 months may be adequate.
- Manufacturing with specialized equipment: 18 to 24 months is typical to account for equipment procurement lead times.
- Food and beverage: 12 months, as rebuilding a licensed commercial kitchen can take 6 to 9 months.
- Extended period of indemnity endorsement: adds 30 to 180 days beyond restoration to recover lost customers, available as an endorsement to most BI policies.
Frequently asked questions
What does business interruption insurance cover?
Business interruption (BI) insurance covers lost net income and continuing fixed operating expenses (rent, utilities, loan payments, payroll) when your business cannot operate due to a covered physical loss such as a fire or storm. It does not cover losses from economic downturns, pandemics (unless specifically endorsed), or utilities failures not caused by physical damage at your premises.
What is the indemnity period?
The indemnity period is the length of time the insurer will pay BI benefits after a covered loss. It begins when business operations are interrupted and ends when your business is restored to the same level of operation it was at before the loss, or when the policy period expires, whichever comes first. Typical periods range from 6 to 24 months.
How is business income defined for insurance purposes?
Insurance industry standard (ISO form CP 00 30) defines Business Income as net income (net profit or loss before taxes) plus continuing normal operating expenses including payroll. This is essentially your gross profit contribution before the loss, which the policy replaces.
What is extra expense coverage?
Extra expense coverage pays for costs above your normal operating expenses incurred to continue or speed the restoration of operations, such as renting temporary premises or expediting equipment repairs. It is often included with BI coverage or available as an endorsement.
How much business interruption coverage do I need?
The ISO standard approach is to calculate your gross earnings (net profit plus fixed costs) for 12 months, then select an indemnity period matching how long it would realistically take to restore full operations. The SBA recommends businesses model a worst-case scenario with at least a 12-month indemnity period.
Official sources
- Insurance Services Office (ISO): ISO Commercial Lines Products (CP 00 30 form basis).
- SBA: Business Insurance Guide.
- NAIC: Business Insurance Consumer Resources.
Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. See our methodology.