What is the primary function of business interruption insurance?

The primary function of business interruption insurance is to compensate for lost income during unforeseen business disruptions. This type of insurance is designed to help businesses recover financial losses resulting from events such as natural disasters, fires, or other incidents that temporarily hinder normal operations.

When a business experiences a disruption that affects its ability to generate revenue—such as a fire that damages the property—business interruption insurance provides coverage for lost profits that the business would have earned if the disruption had not occurred. This coverage may also include the costs associated with continuing certain expenses, such as payroll and rent, while the business is unable to operate as usual.

This essential protective measure allows businesses to stabilize financially during challenging times and aids in a more efficient recovery process, ensuring that they can resume normal operations as quickly as possible.

In contrast, the other options reflect different types of coverage or responsibilities that do not align with the core purpose of business interruption insurance. This specificity is crucial for understanding the different aspects of risk management in commercial property management.