What type of coverage does "business income" insurance provide?

Business income insurance offers financial protection for a business by compensating for income lost during periods of interruption caused by a covered peril, such as fire, storm damage, or other events that disrupt normal operations. This type of insurance is critical for businesses as it helps them maintain cash flow and meet ongoing expenses like rent, salaries, and utilities while they work to restore their operations.

The focus of business income coverage is specifically on the revenue that a business would have earned if the interruption had not occurred, bridging the gap until the business can resume normal activities. This is essential in minimizing the financial impact that disasters can impose on a company.

In contrast, other options do not accurately reflect the purpose of business income insurance. For instance, compensation for employee absenteeism relates to payroll expenses and employee-related issues rather than direct lost income from operations. Coverage for physical assets pertains to property insurance, which protects tangible business belongings, while legal liability coverage focuses on the risks associated with lawsuits and claims against a business, which also diverges from the income-related focus of business income insurance.