Free Business Interruption Insurance Calculator

Step 1: Baseline Sales, Fixed Overhead, Outage Duration & Policy Terms

Disruption & Insurance Policy Parameters

🏢 Operating Baseline & Disruption Impact

Annual Projected Revenue ($)

Cost of Goods Sold (COGS %)

Annual Fixed OpEx ($)

Continuing OpEx Ratio (%)

Restoration Period (Months)

Revenue Interruption (%)

🛡️ Insurance Coverage & Coinsurance Terms

Extra Expenses Incurred ($)

BI Policy Limit ($)

Coinsurance Clause (%)

Waiting Period (Days / 72h)

ISO commercial property standard: Coinsurance compares policy limit to Gross Earnings base (Revenue minus non-continuing COGS).

Net Insurance Claim Payout

$1,385,000

Policy Limit $3.0M (3d waiting deductible: -$61K)

Actual Loss Sustained (ALS)

$2,545,833

Lost Margin: $2.30M + Extra Exp: $250K

Net Retained Loss (Gap)

$1,160,833

Uninsured out-of-pocket cash drain

Coinsurance Compliance

55.6% Compliance

Underinsured! $5.4M required at 80%

Restoration Sensitivity Matrix: Insurance Payout ($) vs. Outage Severity

Simulates insurance claim reimbursement ($) and total loss gap across reconstruction timelines (1 to 6 months) and revenue disruption severity (40% to 100%).

Restoration Period	40% Revenue Drop	60% Revenue Drop	80% Revenue Drop	90% Revenue Drop	100% Complete Outage

Insurance Risk Principles

Understanding Business Interruption (BI)

Key corporate risk principles from ISO commercial property insurance standards:

Gross Earnings Base: Total annual revenues minus variable non-continuing cost of goods sold.
Continuing Fixed Overhead: Unavoidable expenses during an outage (rent, management salaries, loan interest, insurance).
The Coinsurance Trap: If a firm understates Gross Earnings to save premium, a coinsurance penalty slashes claim payouts proportionately ($Policy_Limit / Required_Limit$).
Extra Expense Protection: Funds temporary relocation, backup IT servers, and expedited delivery to preserve market share.

Evaluate supply disruptions in the Supply Chain Risk Lab.

Mathematical Formulation

Business interruption claim equations

Gross_Earnings = Revenue × ( 1 - COGS_% )

Coinsurance_Required = Gross_Earnings × Coinsurance_%

Payout_Ratio = min( 1.0, Policy_Limit / Coinsurance_Required )

Actual_Loss_Sustained (ALS) = Lost_Gross_Margin + Extra_Expenses

Net_Insurance_Payout = min( Policy_Limit, ( ALS - Deductible ) × Payout_Ratio )

Net_Retained_Loss = ALS - Net_Insurance_Payout

Calculate emergency cash runway in the Burn Rate Lab.

FAQ

Business interruption insurance questions

What is Business Interruption (BI) Insurance?

Business Interruption insurance replaces lost operating income and covers continuing fixed expenses (such as rent, key payroll, utilities, and debt interest) when a direct physical disaster halts business operations during the period of restoration.

What is the difference between Continuing and Non-Continuing expenses?

Continuing expenses are fixed commitments that must be paid despite a shutdown (executive salaries, property leases, insurance, debt payments). Non-continuing expenses cease automatically when operations halt (raw material purchases, hourly variable labor, packaging supplies).

How does the Coinsurance Clause affect insurance claim payouts?

If a business purchases a policy limit below the required coinsurance percentage (e.g., 80% of annual Gross Earnings), the insurer applies a penalty ratio: Payout = Loss x (Policy Limit / Required Limit). This leaves the business underinsured for a large portion of the claim.

What is Extra Expense coverage in a commercial property policy?

Extra Expense coverage reimburses the emergency costs incurred to reduce business downtime and maintain customer service, such as renting temporary office facilities, leasing backup generators, or paying expedited air freight fees.

Can I export the business interruption claim audit and sensitivity matrix to CSV?

Yes. You can export complete Gross Earnings calculations, continuing expense breakdowns, coinsurance audits, and 6x5 restoration sensitivity tables as a UTF-8 CSV spreadsheet with formula defense.

Continue Exploring Risk & Continuity Tools

Explore our Risk & Resilience Hub, model recovery targets in the Business Continuity RTO/RPO Lab, evaluate supply chain failures in the Supply Chain Risk Lab, analyze credit losses in the Credit Risk Expected Loss Lab, or calculate cash reserves in the Cash Runway & Burn Rate Lab.