Tools

Business income (interruption) limit calculator

Estimate the business income limit you need after a covered loss, including extended recovery and extra expense, then test it against your coinsurance clause.

Runs entirely in your browser: nothing you enter is sent or stored by this site. Results are estimates for planning, not a quote or advice.

How to use it

Use next year's numbers, not last year's. Your accountant or your budget will have most of them. The starting figures are examples.

  1. Revenue expected over the next 12 months.
  2. Cost of goods sold, materials and supplies consumed, services bought for resale. These come out of the coinsurance basis on the standard form.
  3. Other expenses that would stop while you are closed: up to three rows, each with a name and an annual amount, such as utilities, commissions or freight out.
  4. Ordinary payroll. Choose "Covered" if payroll would continue during a shutdown, or "Excluded by endorsement." The annual payroll field matters only when payroll is excluded. See ordinary payroll.
  5. Months to rebuild and reopen, the period of restoration. Think about permits, construction and equipment lead times.
  6. Extended period after reopening, in days, and the share of normal income still missing during it. Check your form for the number of days it includes.
  7. Extra expense: a temporary location, rush shipping, overtime.
  8. Coinsurance percentage on the business income form, from none to 125%, and the limit you carry, if you want to test it. Leave it blank to test the suggested limit.

The math

  • Coinsurance basis = revenue − cost of goods sold − excluded payroll (if any).
  • Exposure = basis − other expenses that would stop. This is net income plus the expenses that continue.
  • Loss during restoration = exposure × months ÷ 12.
  • Extended period = exposure ÷ 365 × days × share still missing.
  • Suggested limit = restoration loss + extended period + extra expense, rounded up to the next $10,000.
  • Coinsurance check: required limit = basis × coinsurance %. If the limit is below it, a loss is paid at limit ÷ required, so the penalty share is 1 minus that ratio.

Hypothetical bakery: revenue $1,800,000, cost of goods $600,000, other stopping expenses $40,000, payroll covered, 5 months to reopen, 60 more days at 40% missing, $50,000 of extra expense. The basis is $1,200,000 and the exposure is $1,160,000. Five months is $483,333, the extended period adds $76,274, and extra expense $50,000: $609,607, rounded to $610,000. With 80% coinsurance the requirement is $960,000, so a $610,000 limit is paid at 63.5%, a 36.5% penalty share. The loss estimate and the coinsurance requirement can sit far apart; that is a reason to ask about a lower percentage, an agreed value option or a monthly limit of indemnity, not just a bigger limit.

Assumptions and limits

  • Smooth months. The tool spreads exposure evenly: months ÷ 12. If your shutdown would hit a peak season, the real loss is larger.
  • Constant shortfall. It assumes a flat share of income missing during the extended period, when recovery usually ramps.
  • No waiting period. Forms commonly exclude the first hours or days of a shutdown. The tool does not model that.
  • Basis, not loss. The coinsurance basis on the standard ISO form is 12 months of net income plus operating expenses, less cost of goods sold and similar items. It is not reduced by other expenses that would stop, so it is larger than the loss you would suffer. Check the business income worksheet with your broker.
  • Extra expense and dependencies. It treats your extra-expense guess as a flat sum. It does not cover dependent properties, civil authority or utility interruption, which have their own limits or sublimits. See contingent business interruption insurance and supply chain risk and civil authority coverage: when an order closes your doors.
  • Covered cause of loss. Business income pays only after direct physical loss from a covered cause. A flood, earthquake or pandemic closure may not be covered at all.

If you are underinsured for coinsurance, the page shows the limit that would fix it, rounded up to the next $1,000. Take the numbers to your broker; the worksheet on the policy is what counts. Read how to calculate a business income limit and business interruption insurance: how business income coverage works, and test the property side with the coinsurance penalty calculator.

Last reviewed October 10, 2026

Related guides

How to calculate a business income limit A step-by-step method for setting a business income limit: the coinsurance base, how long you would be down, and the options that fit the limit to your risk. Business interruption insurance: how business income coverage works What business income coverage pays after a covered physical loss, how the 72-hour wait, period of restoration and extended income work, and where the gaps are. Extra expense coverage explained What extra expense coverage pays after a covered loss: relocation, temporary space and equipment, how it differs from lost income, with an example. Documenting a business interruption claim, from day one to final payment How to prove a business income and extra expense loss under ISO form CP 00 30: the records insurers ask for, how the loss is measured and where claims stall. The coinsurance clause and how underinsurance is penalized How the coinsurance formula works, with worked penalty examples for buildings and business income, and four ways to avoid an underinsurance penalty.

Terms used here

Business income Property coverage that replaces net income and continuing operating expenses, including payroll, while a covered physical loss suspends operations. Period of restoration In a business income policy, the time for which lost income is covered, from a waiting period after damage until repairs should be done or operations resume. Extra expense Property coverage for the added costs of staying open after a covered loss, such as a temporary location, rented equipment or overtime. Ordinary payroll In a business income policy, rank-and-file wages and related costs that coverage can keep paying during a shutdown, often for a limited number of days. Coinsurance A property policy condition requiring you to insure to a set percentage of value, or share the loss. (Health plans use the word for a cost share.)

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