Business Interruption Insurance Claim Calculator

Estimate your potential business interruption claim after a covered shutdown. Enter revenue, variable costs, ongoing fixed expenses, extra expenses, and downtime to get a transparent claim range.

Why Business Interruption Claims Are Hard to Estimate

When a fire, flood, equipment failure, or other covered event shuts a business down, the immediate damage is visible: a burned kitchen, a broken HVAC unit, a water‑soaked retail floor. The financial damage is not. While you repair the physical problem, revenue drops or stops, but many expenses continue. Employees still need to be paid, leases still accrue, software subscriptions still renew, and debt payments still come due. Business interruption insurance exists to bridge that gap, replacing lost income so that the business can survive the interruption and reopen.

Yet business interruption claims are notoriously confusing. Policies use terms like “business income,” “period of restoration,” “continuing expenses,” and “extra expense.” Coverage often begins only after a waiting period. Some expenses are covered, others are not. Insurers may ask you to prove what your revenue would have been “but for” the loss, which requires comparing to historical performance and seasonality. Small businesses frequently underestimate their claim because they focus on gross revenue rather than lost profit plus continuing costs. Others overestimate by counting expenses that would have stopped anyway. A clear model helps you avoid both mistakes.

This calculator provides a practical, broadly applicable estimate. It is not a substitute for a forensic accountant, and it does not interpret policy language for you. But it will show the core arithmetic behind most claims and help you prepare for discussions with your insurer.

What Business Interruption Insurance Typically Covers

Most business interruption policies cover two main buckets during the “period of restoration” (the time it takes to repair or replace the damaged property and resume operations):

• Lost business income. This is the profit you would have earned if the loss had not happened. Policies usually define it as net income plus continuing normal operating expenses.
• Continuing expenses. Fixed costs that still occur even if you cannot operate, like rent, utilities minimums, key staff payroll, and loan interest.

Many policies also include extra expense coverage: reasonable additional costs you incur to reduce the interruption, such as renting temporary space, paying overtime to speed repairs, or leasing replacement equipment. Extra expense coverage can be a separate limit or part of the business income limit.

The Core Claim Formula

A simplified business income loss model starts with gross revenue, subtracts variable costs that would not have been incurred during shutdown, then adds continuing expenses and extra expenses. Let:

• R = average revenue per day before the loss
• v = variable cost rate (% of revenue that disappears when revenue disappears)
• F = continuing fixed expenses per day
• E = extra expenses per day (or total extra expenses)
• d = number of downtime days
• w = waiting period days (policy deductible in time)

Then covered days are max(0, d − w). The daily lost profit is revenue times (1 − variable rate). The basic claim estimate is:

This formula aligns with the common policy definition: net income plus continuing expenses, plus any qualifying extra expense.

Worked Example

Imagine a neighborhood bakery that averages $2,400 of revenue per day. About 45% of that revenue is variable cost (ingredients, packaging, hourly staff that can be reduced). The bakery’s continuing fixed expenses—rent, insurance, salaried manager, basic utilities—are about $600 per day. A kitchen fire closes the shop for 28 days. The policy has a 72‑hour (3‑day) waiting period. The owner spends $4,500 in extra expense renting a temporary commissary to keep wholesale orders alive.

Covered days are 28 − 3 = 25 days.

Daily lost profit is $2,400 × (1 − 0.45) = $1,320.

Daily business income loss plus continuing expenses is $1,320 + $600 = $1,920.

Loss for covered days is 25 × $1,920 = $48,000.

Add extra expenses of $4,500 for a total claim estimate of $52,500.

An insurer may adjust this for seasonality (for example, if the fire happened during a holiday rush), but the baseline math is correct.

Comparison Table: What Usually Counts

Period of Restoration and “Waiting Period”

Business interruption coverage is tied to time. Two time concepts matter:

• Waiting period. Often 48–72 hours. Losses during the waiting period are not covered, which is why the calculator subtracts waiting days from downtime days.
• Period of restoration. The period during which the insurer will pay for lost business income—usually from the date of loss until the property is repaired and the business can resume operations (or should have been able to, using reasonable speed and due diligence).

In practice, insurers sometimes challenge the length of the restoration period if they believe repairs could have been completed faster. Document supply chain constraints, permitting delays, and contractor scheduling. If you can partially reopen, your claim may shift from “total interruption” to “partial interruption,” where reduced revenue is compared to the but‑for baseline.

Seasonality and the “But‑For” Revenue Baseline

Many businesses are seasonal. A landscaping company loses more in spring than in winter; a toy store loses more in November and December; a hotel’s revenue depends on events and local tourism. Claims typically require a but‑for estimate of what revenue would have been during the downtime. A practical approach is to compare:

• Same weeks/months from the prior year.
• Trailing 3–12 month average adjusted for trend.
• Bookings on the calendar (for appointment‑based businesses).

This calculator uses an average revenue per day input, which works well if you pick a representative baseline for the affected period. If you know the downtime spans a peak season, use a peak‑season average.

Documentation Checklist

Claims are strengthened by clean, consistent documentation. A short checklist helps:

Policy Limits and Coinsurance (Why “Math” Isn’t the Whole Story)

Many policies have a business income limit (for example, 12 months of coverage) and sometimes coinsurance requirements that penalize underinsuring. This estimator does not apply those provisions because they vary widely. If your policy has a stated limit, treat the estimate as capped at that limit. If your policy has coinsurance, compare your reported business income values to the required percentage to avoid surprises.

Limitations and Assumptions

This calculator uses a compact model so it works for many business types. It assumes:

• Revenue before loss is a good proxy for “but‑for” revenue during the interruption (no explicit seasonality modeling).
• Variable costs scale linearly with revenue.
• Continuing fixed expenses are stable per day.
• Extra expenses are entered as total qualifying costs.
• Policy limits, coinsurance requirements, and sub‑limits are not applied.

To refine a real claim, document daily sales history, compare to prior‑year periods, and keep receipts for all extra expenses. Many businesses also hire a public adjuster or forensic accountant to negotiate policy interpretations. Still, the estimate here gives you a solid, transparent starting point.