Does commercial property insurance cover business interruption?

Complete Guide to Business Interruption and Commercial Property Insurance

Why This Question Matters for Colorado and Utah Residents

In both Colorado and Utah, every business is vulnerable to natural disasters, severe weather, and unexpected property damage. Knowing whether your commercial property insurance covers business interruption can mean the difference between surviving a temporary closure or facing financial disaster.

• Severe weather and wildfires: Colorado consistently ranks #2 in the nation for hail claims, while both states face annual wildfire risks. Closures caused by these events often highlight gaps in coverage.
• Local regulations and business realities: Nearly 67% of businesses in CO and UT report insufficient business interruption coverage, yet the region's construction timelines for repairs can extend well beyond a month.
• Real financial consequences: Average property claims from hail, water, or fire can force closures that result in $50,000 or more in lost revenue, not including ongoing expenses like payroll or rent.

What Most People Get Wrong

The most common misconception is that commercial property insurance automatically covers lost income when a business is forced to close its doors due to damage. In reality, business interruption coverage must be added—it's not included by default. Another misunderstanding is thinking all closures are covered; in fact, only those resulting from causes listed in your policy apply (floods, for example, are typically excluded).

Additionally, many business owners underestimate how long recovery can take and how quickly operating expenses add up during downtime in cities like Fort Collins or Salt Lake City, where labor and supply chain issues can slow repairs.

The Complete Picture

Commercial property insurance protects your building, equipment, and inventory against damage from risks like fire, hail, and vandalism—but it does not automatically protect your lost income or normal operating expenses during a closure. For that, business interruption insurance (sometimes called business income coverage) is needed as an add-on or part of a bundled policy.

This coverage reimburses you for lost revenue, ongoing expenses (such as payroll, taxes, and loan payments), and sometimes the extra costs needed to minimize your downtime (like renting a temporary location). In Colorado and Utah, where property claims can take over 60 days to resolve and hail damage or wildfires are common, this add-on is essential for business survival. Without it, statistics show that two-thirds of businesses never fully recover from a major loss-related closure. Review your coinsurance clause as well—insuring to at least 80% or 90% of your property's value is often required to prevent reduced payouts.

Making the Right Decision for Colorado and Utah Residents

Question 1: Can my business afford to lose income during repairs or rebuilding?

Before choosing coverage, ask yourself if your business could survive a month—or longer—without incoming revenue:

• Assess your average monthly expenses (payroll, rent, utilities).
• Consider how long similar repairs have taken in your area (average Colorado property claims take 45–60 days to resolve).

Question 2: Does my current policy include business interruption—or only property coverage?

Request a coverage review from your broker and ask for the exact language. Look for exclusions (like flood or earthquakes) and ensure your business interruption limit matches current revenues, not outdated numbers.

Question 3: Am I at higher risk for regional perils—like hail, wildfire, or post-fire flood?

Businesses in Colorado's hail corridor or Utah's wildfire zones face heightened risks. Plan for multi-week closures, and consider adding extra expense coverage to fund a fast comeback. Review local trends each year as conditions—and costs—can change rapidly.