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When an unexpected event affects your business — fire, flood, or structural failure — the financial consequences can be devastating. It’s not just about repairing the damage, but covering fixed costs while your business generates no income. This is where business interruption insurance becomes an essential tool for financial protection.

This article explains what this insurance is, how it works, and why it’s key to ensuring your business’s continuity.

How Business Interruption Insurance Works

This coverage is designed to replace the income your business would have earned after a covered loss (such as a fire or flood). Simply put, it activates when physical damage prevents normal operations.

Basic coverage:

Loss of gross profit: Covers income lost due to business interruption

Fixed expenses: Pays rent, salaries, utilities

Extra expenses: Costs to resume operations quickly, such as renting temporary space or hiring additional staff

Example: If you own a restaurant forced to close due to a kitchen fire, this policy covers lost profit and fixed costs, keeping you afloat while repairs are made.

Key Benefits of Business Interruption Insurance

Financial stability — It protects your cash flow, avoiding loans or draining savings.

Reduced stress — Knowing you have coverage allows you to focus on solutions and reopening.

Tailored coverage — Policies can be customized to your specific industry and risk profile.

Who Needs Business Interruption Insurance?

If your business relies on a physical space (shops, offices, restaurants, workshops), this insurance is crucial. Hospitality, retail, and manufacturing sectors are especially vulnerable.

Real cases:

Hospitality: A hotel sustains storm damage during peak season. The coverage allows staff retention and repairs without harming reputation.

Small business: A clothing store loses inventory in a fire. The policy covers lost sales during closure in addition to stock replacement.

What to Consider When Buying

Indemnity period — Usually 6–12 months but can be extended.

Combined coverage — Should be paired with property damage insurance for full protection.

Accurate revenue reporting — Payouts are based on declared profit; keep records updated.

Exclusions and limits — Check carefully; non-physical causes (e.g. pandemics) might not be covered.

FAQs

How much does it cost? Depends on business type, size, and coverage level.

What documents are needed for a claim?

Prior income statements

Loss details

Repair invoices/quotes

Is it mandatory in Spain? No, but highly recommended for businesses with high fixed costs.

Conclusion

Business interruption insurance can be the difference between survival and permanent closure. It protects your income and provides peace of mind that your investment is safe.

At MataSeguros, we offer tailored solutions for businesses of all sizes. Our experts help you choose the right policy and guarantee maximum protection.

Don’t wait until disaster strikes — secure your business’s future today.