What is the function of Business Interruption Insurance?

Business Interruption Insurance is designed specifically to address the financial impact on a business when it cannot operate due to a covered event, such as a natural disaster or a fire. This type of insurance provides compensation for lost income that the business would have earned had the interruption not occurred, as well as covering continuing operating expenses that still need to be paid during the downtime, such as rent and utilities.

This insurance is critical because it helps businesses maintain cash flow while they are unable to generate revenue due to circumstances beyond their control. By compensating for lost income and necessary ongoing expenses, it assists businesses in recovery and helps prevent long-term financial damage.

The other options do not accurately capture the function of Business Interruption Insurance. Legal expenses, business expansion funds, and property damage are covered by other types of insurance products and are not the primary focus of Business Interruption Insurance.