What does business interruption insurance cover in a BOP?
Business interruption insurance in a BOP covers your lost income and operating expenses if your business is forced to temporarily close due to a covered event—like fire, hail, or severe weather—common in Colorado and Utah. It doesn’t cover losses from excluded events, such as floods, unless you add the right endorsement.
Your trusted Colorado and Utah insurance partner, providing peace of mind and expert local guidance.
Complete Guide to Business Interruption Insurance in a BOP
Why This Question Matters for Colorado and Utah Residents
Both Colorado and Utah face serious risks—from wildfires, hailstorms, and winter weather to infrastructure outages—that frequently halt business operations. Business interruption coverage is central for keeping companies afloat after a disaster or significant property damage.
- Severe Weather Events: Colorado ranks #2 nationally for hail claims, and wildfires in both states threaten business continuity each year.
- Economic Survival During Closures: The median small business in Colorado or Utah loses $20,000 or more during just a two-week closure.
- Regulatory Requirements & Timely Claims: State law mandates insurers pay valid claims within 60 days—critical for rapid recovery and rebuilding confidence.
What Most People Get Wrong
Many business owners assume their general property policy or building coverage automatically protects lost revenue or expenses when they can't operate, but that's not the case. In fact, 67% of Colorado and Utah businesses that failed post-incident lacked adequate business interruption insurance.
Another common misconception is believing this coverage applies to any disruption—including floods or code upgrades—when standard policies actually exclude these risks unless specifically endorsed.
The Complete Picture
Business interruption insurance in a Business Owner’s Policy (BOP) steps in when a covered disaster (like fire, hail, or windstorm) forces your business to close temporarily. It reimburses you for lost net income, fixed operating expenses (like payroll, rent, and utilities), and even some relocation costs if you must move temporarily while repairs are made. This ensures you can pay your bills and employees, protecting both your financial security and your reputation in the community.
Coverage begins after a brief waiting period and only applies as long as your property is being repaired or rebuilt. Keep in mind, floods and certain other perils are excluded unless you add specific endorsements. For Colorado and Utah businesses, where weather events drive the majority of large claims, tailoring your policy to include all likely scenarios is crucial. Adequate business interruption coverage is often the difference between a temporary setback and permanent closure.
Making the Right Decision for Colorado and Utah Residents
Question 1: How much revenue and expense would I need to replace if my business closed for two weeks—or longer?
Consider your average monthly revenue, fixed costs, and payroll. For most small businesses in the region, even a short closure means $10,000–$30,000 in lost income plus ongoing bills.
- Review your bank statements for past 6-12 months to estimate your "covered loss."
- Calculate employee wages, rent, utilities, and loan payments that won't pause during a closure.
Question 2: Does my business face unique risks that standard business interruption might not cover?
Businesses near rivers, foothills, or wildfire burn scars in Colorado or Utah may need endorsements for flood or extended coverage. Ask your advisor whether your BOP includes or excludes triggers like utility outages, civil authority shutdowns, or regional disasters.
Question 3: Am I updating my coverage limits as my business grows?
Many owners forget to adjust coverage as their revenues climb or costs rise. Make it a habit to review your limits annually or as you add new revenue streams, locations, or major equipment. Proper coverage grows with your business—and is essential in high-risk states like Colorado and Utah.
Trusted by Your Neighbors
Local knowledge, industry-leading protection
4.9/5 Stars
Google Reviews from real customers
97% Retention Rate
Fort Collins families and businesses protected
Independent
We work for you, not insurance companies
Local
Fort Collins owned & operated since 1992
Real World Examples
Fort Collins Restaurant Owner Survives Hailstorm Disaster
Background: Jenny, the owner of a family restaurant in Old Town Fort Collins, has a BOP with business interruption coverage and pays $157/month ($1,885/year).
Coverage: Her BOP includes $500,000 property and $250,000 business interruption coverage (actual loss sustained, up to 12 months).
Monthly Premium: $157/month ($1,885/year)
The Incident: In June, a powerful hailstorm shattered skylights and flooded the kitchen, forcing a 12-day closure during their busiest week.
Total Claim Cost: $34,800 (property repairs $25,000 + 12 days lost income $7,800 + fixed expenses $2,000)
Jenny's Cost: $1,500 deductible – her policy paid the rest, allowing her to fully pay staff and manage all costs.
"I thought a weather closure would bankrupt us, but our insurance covered not just repairs, but our income and payroll so we could reopen with zero debt. FoCoIns made it simple."
Denver Tech Startup: Power Outage Halts Operations
Background: Marcus runs a small software firm in Denver’s RiNo district, spending $112/month ($1,345/year) for his BOP with business interruption.
Coverage: $1,000,000 property, $250,000 business interruption (actual loss sustained, up to 6 months).
Monthly Premium: $112/month ($1,345/year)
The Incident: An electrical fire in the building caused the fire suppression system to flood the server room, forcing a 10-day closure while repairs were made and equipment replaced.
Total Claim Cost: $26,500 (equipment repairs $14,000 + income loss $10,000 + fixed costs $2,500)
Marcus's Cost: $2,000 deductible – everything else covered, including remote work setup costs for staff.
"Our policy saved not just our data, but our cash flow—without it we would have lost key projects and employees. The peace of mind was worth every premium dollar."
Park City Gear Shop: Spring Flood Threatens Business
Background: Emily owns an outdoor gear store near Main Street, Park City, UT. Her premium is $129/month ($1,548/year), with a BOP that includes a flood endorsement.
Coverage: $750,000 property, $150,000 business interruption (including flood), 60-day indemnity period.
Monthly Premium: $129/month ($1,548/year)
The Incident: Spring runoff floods the shop, leading to a two-week closure during a major sales event.
Total Claim Cost: $42,200 (property damage $29,000 + lost income/expenses $13,200)
Emily's Cost: $2,500 deductible – her coverage paid for cleanup, inventory replacement, and loss of crucial sales revenue.
"If I hadn’t had the flood endorsement, our biggest month would’ve been a total loss. This coverage let us keep every employee and bounce right back."
Avoid These Common Mistakes
Mistake #1: Skipping Business Interruption Coverage Entirely
What People Do: Many Colorado and Utah business owners think they’re saving money by choosing a property policy without business interruption coverage.
Why It Seems Logical: It can feel like an “extra”—especially in a year without a claim or if margins are tight.
The Real Cost: Facing a two-week closure, the average small business in CO/UT loses $20,000–$30,000 in revenue and fixed costs—without coverage, that comes directly out of pocket and can mean permanent closure.
Smart Alternative: A bundled BOP with business interruption usually adds less than $1,000/year—and can be the difference between recovery and bankruptcy. FoCoIns helps design coverage that fits your business realities and budget.
Mistake #2: Assuming Coverage Limits Are Unlimited or Based on Old Income
What People Do: Owners assume their business interruption payout will match any lost revenue, or they never update limits as their business grows.
Why It Seems Logical: Coverage details can be confusing, and policies sometimes promise “actual loss sustained,” leading to overconfidence.
The Real Cost: If your income or expenses outgrow your stated policy limit, you could face devastating shortfalls (e.g., a retailer grossing $75k/month but with a $10k/month limit could be $65k out of pocket in a major event).
Smart Alternative: Review your revenue and expense numbers at least annually with your FoCoIns advisor so your policy grows with your business—especially in Colorado and Utah’s fast-changing economies.
Mistake #3: Overlooking Coverage Gaps for Excluded Perils like Flood or Code Upgrades
What People Do: Many only realize after a loss that basic business interruption insurance doesn’t cover floods or increased costs for updated building codes.
Why It Seems Logical: Standard policy wording can be complex, and owners may not realize certain events are specifically excluded.
The Real Cost: In Colorado and Utah, floods after wildfires or code-required upgrades can lead to $10,000–$100,000+ in unreimbursed expenses—derailing recovery plans.
Smart Alternative: Work with FoCoIns to review your policy for exclusions and add endorsements for local risks so your coverage truly matches your greatest vulnerabilities.
FAQs On The Same Topic
Find answers to your most pressing insurance questions right here.