When Your Doors Are Closed, Your Bills Are Still Open
A fire, a flood, a severe storm, a major equipment failure. Any of these can force a business to close for days, weeks, or longer. When that happens, revenue stops, but the bills do not. Payroll, rent, loan payments, utilities, and operating costs continue even when the doors are shut and the customers are not coming in. This is the scenario business interruption insurance is designed for, and fewer businesses carry it than you might expect.
Less than one in four small businesses with physical locations currently carry business interruption coverage. That number should be startling given the risk environment, especially in Texas. Governor Abbott issued a severe storm disaster proclamation in June 2026 following flooding, hail, and tornado damage across multiple Texas counties, and the SBA extended disaster loan relief to affected small businesses. For those without business interruption coverage, the financial gap between shutting down and reopening is filled entirely out of pocket, if it can be filled at all. Industry data shows that 90 percent of businesses that suffer a significant disaster close within two years.
What Business Interruption Coverage Actually Does
Business interruption insurance replaces lost income and covers ongoing fixed expenses during the period your business is unable to operate due to a covered event. If a fire forces you to close for eight weeks while repairs are made, business interruption pays the revenue you would have earned during that time, along with the fixed costs you still owe. It is not a property policy. It is a revenue policy, and the distinction matters.
The coverage typically kicks in after a waiting period, often 48 to 72 hours, and continues for a defined restoration period, which is the time it takes to get your operations back to where they were before the loss. Some policies also include coverage for extra expenses, meaning the additional costs you incur to keep operating in a temporary location while your building is being repaired. If you have ever wondered how a business survives months of downtime after a disaster without going under, the answer is often this coverage.
The Gaps Owners Discover Too Late
There are two common problems with business interruption coverage, and both tend to surface at the worst possible time. The first is not having it at all. Many owners assume their commercial property policy or BOP handles lost income automatically. In most cases, business interruption is a separate endorsement that has to be specifically included. If it is not on your policy, it is not there.
The second problem is having it but with limits set too low. Business interruption limits need to reflect your actual revenue and fixed costs, not a rough estimate from several years ago. If your business has grown since the last time those numbers were set, or if inflation has pushed your operating costs higher, the limit on your current policy may cover a fraction of the loss you would actually face. An extended closure can burn through an inadequate limit faster than owners expect, and once it is exhausted, the remaining costs fall back on the business.
Why This Matters Right Now in Central Texas
Texas weather does not ask for permission. The 2026 storm season has already produced significant damage across the state, and the pattern of severe convective storms, flooding, and wind events is not easing. For businesses in Central Texas, the threat is not theoretical. It is seasonal, recurring, and largely unpredictable in terms of exactly where and when a storm will hit. A single event can force a closure that lasts longer than the owner anticipates, particularly when contractors and materials are in high demand across the region after a major storm.
If you are a business owner in this part of the state and you have not reviewed your business interruption coverage recently, that conversation is worth having now rather than after the next event. donegan can help you look at what your current policy covers, whether your limits reflect today’s revenue and costs, and where the gaps might be. It is one of the most important pieces of a commercial insurance program, and one of the most commonly missing.
Frequently Asked Questions
Is business interruption insurance included in a standard commercial property policy?
Usually not automatically. It is typically a separate endorsement or coverage addition that must be specifically included in your policy. Some business owners policies bundle a limited amount, but the limits are often lower than what a prolonged closure would require. It is worth confirming exactly what your policy includes.
How are business interruption limits calculated?
They are generally based on your projected revenue and ongoing fixed expenses over a defined period, often 12 months. The goal is to cover the income you would have earned and the costs you would still owe during the time it takes to restore your operations. If your revenue or costs have changed since the limit was set, the numbers may need updating.
Does business interruption coverage apply to flooding?
It depends on your policy. Standard commercial property policies typically exclude flood damage, and business interruption coverage that is tied to the property policy usually follows the same exclusions. Flood coverage through the National Flood Insurance Program can include business interruption in some cases, but the limits and terms differ. This is a specific question worth reviewing with your agent.
