The short answer
Business interruption coverage replaces lost net income and continuing expenses while your operations are suspended because of covered physical damage. Extra expense coverage pays reasonable costs to keep operating or reopen sooner, such as temporary space or expedited equipment.
Why it matters
After a fire or major loss, lost income can exceed the cost of the physical damage. Business interruption claims are also among the most disputed, because the numbers depend on projections and accounting judgments.
Where it fits in your case
After covered damage to your property, or, if your policy includes the extension, damage to a supplier’s or customer’s property, a utility outage, or an order from a civil authority.
What to expect
Physical damage usually required. Coverage generally depends on direct physical loss or damage. Illinois courts, like most, rejected claims that lacked physical damage during the COVID-19 closures.
The restoration period. Coverage usually lasts as long as repairs should reasonably take, which may differ from how long they actually take. Some policies add an extended period after reopening.
Waiting period. Many policies do not pay for the first 72 hours.
How the loss is measured. Based on what the business would have earned, not total revenue. Expect accountants on both sides.
Limits and conditions. Monthly caps, coinsurance provisions, and sublimits can reduce recovery.
What to do now
Track lost revenue, continuing payroll, and other ongoing expenses from day one.
Keep extra expenses separate, with receipts.
Gather historical financial statements early.
Consider submitting the claim in stages rather than waiting until the end.
Know the policy’s deadline to sue. In Illinois, that deadline is generally paused from the time a proof of loss is filed until the claim is denied.
What we need from you
The policy, two to three years of financial statements, monthly sales records, payroll, and receipts for extra expenses.
Common misconceptions
“Coverage runs until we reopen.” It usually runs for the time repairs should reasonably take.
“We’ll be paid our normal revenue.” Coverage replaces lost net income and continuing expenses, not gross sales.