What Is Business Interruption Insurance — and Why Businesses Can’t Afford to Skip It

If a fire, windstorm, or burst pipe forced you to close your doors tomorrow, how long could your business survive without revenue?

For many businesses in Central Texas — from Georgetown and Round Rock to Austin, San Marcos, New Braunfels, and throughout the Hill Country — the honest answer is: not long.

That’s where Business Interruption Insurance, also known as Business Income Insurance, steps in.

What Is Business Interruption Insurance?

Business interruption coverage is designed to replace lost income if your business is forced to temporarily shut down due to a covered property loss.

In simple terms:
If a covered event damages your building or equipment and you can’t operate, this coverage helps replace the revenue you would have earned.

It typically applies after a covered claim under your commercial property policy — such as:

• Fire
• Hail or windstorm damage
• Lightning strikes
• Vandalism
• Certain water damage events

In a region like Central Texas, where severe storms, hail, and high winds are common, this coverage isn’t optional — it’s strategic.

What Does Business Income Insurance Actually Cover?

A properly structured business income policy can help cover:

• Lost net income (based on your financial records)
• Ongoing operating expenses (rent, utilities, payroll, loan payments)
• Employee wages
• Taxes and insurance payments

Some policies also include Extra Expense coverage, which helps pay for temporary relocation, expedited shipping, or renting equipment so you can resume operations faster.

Because here’s the reality: bills don’t stop just because your building is damaged.

What About Supply Chain Disruptions?

Many Hill Country businesses rely on vendors, manufacturers, or distribution centers. If a key supplier suffers a covered loss and you can’t get the materials you need, you may need Contingent Business Interruption Coverage.

This extends protection beyond your four walls — something we’ve seen become increasingly important in recent years.

If your revenue depends on someone else’s property staying operational, this coverage deserves serious consideration.

How Long Does It Pay?

Business income coverage lasts during the period of restoration — the time it takes to repair or rebuild your property to pre-loss condition.

Policies may also include an Extended Period of Indemnity, which continues income protection after reopening while your revenue ramps back up.

That detail alone can make or break a recovery.

Common Misconceptions

One of the biggest misunderstandings we see?
Business owners assume their commercial property policy automatically covers lost income.

It doesn’t — unless business income coverage is specifically added.

Another common issue: underinsuring income. If your financials aren’t accurately reported, your claim payment may fall short when you need it most.

Why It Matters in Central Texas

From hailstorms in Cedar Park to flash flooding in San Marcos and wildfire exposure in parts of the Hill Country, businesses here face real, region-specific risks.

Business interruption insurance isn’t about preparing for worst-case thinking — it’s about cash flow continuity. It keeps your payroll running, your rent paid, and your recovery plan moving.

In short: it helps you keep your business alive while you rebuild.

At Dowd Insurance Agency, we work with Central Texas businesses to review revenue projections, operating expenses, and risk exposures to structure business income coverage correctly — not just minimally.

Because when disaster strikes, survival depends on preparation.