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Business Interruption Insurance for Sports & Fitness Businesses

Business Interruption Insurance for Sports and Fitness Businesses

Get a quote on Business Interruption Insurance

Although a typical commercial property insurance policy protects the value of your property, what if damages to your business property impact your ability to operate? This is certainly a risk for many sports and fitness businesses that rely on fitness equipment and an open business location. Adding Business Interruption Insurance to your policy is vital in protecting your business from loss of income due to property damage interruptions.

What is Business Interruption Insurance?

Business Interruption Insurance (also known as business income insurance) provides coverage for loss of income and operating expenses if your business must temporarily close to recover from physical loss, damage, or destruction by a covered peril. This coverage includes the business’s net profits and normal operating expenses such as rent, employee salaries, and taxes.

Business Interruption Insurance is unavailable as a standalone policy. Instead, it added to your commercial property insurance policy or bundled with a business owner’s policy. 


Why do you need Business Interruption Insurance?

As a sports and fitness business, you likely rely on functioning fitness equipment and an open business location. Damage to your equipment, building, or other business property will have a direct impact on your ability to operate and collect revenue. With these factors in mind, it is particularly important for sports and fitness businesses to consider Business Interruption Insurance.


What does Business Interruption Insurance cover?

Business Interruption Insurance covers lost income if your business is unable to operate due to property damage, lost profits that would have been earned if the property damage had not occurred, and operating expenses (such as utilities, rent, and employee salaries). The direct physical loss, damage, or destruction to property must be the result of a covered peril in order to qualify. These covered perils are the same ones listed in your commercial property insurance policy, which typically include fire, lightning, explosion, theft, vandalism, windstorm, and more. 


Period of Restoration

Your Business Interruption Insurance is only liable for the loss of business income during the period of restoration, which is the amount of time that is reasonably required to rebuild, repair, or replace the damaged or destroyed property. The period of restoration can also be the amount of time required to move into a different property and permanently reopen if that time period is shorter. 

The period of restoration is typically 12 months, but this can be extended up to an additional 24 months by paying an added premium when the policy is purchased. If your policy expires or ends before the period of restoration is over, your insurer will continue to compensate your business for lost income until the period of restoration is complete. 


Waiting Period 

Business Income Insurance is usually subject to a waiting period, which is most commonly 72 hours. None of the losses to business income during the waiting period are covered. The waiting period begins at the time of the loss.

Extra Expense Coverage

Business Interruption Insurance policies can come with or without extra expense coverage. Extra expense coverage pays for expenses that are beyond a business’s normal operating costs. It reimburses your business for money spent to avoid or minimize a business shutdown. This additional coverage only provides funds for expenses that would not have been incurred if the property had not been damaged. It is particularly invaluable for businesses that must continue directly after a disaster. 

Some businesses have the means to move into a temporary location to avoid business shutdown. Extra expense coverage can assist with moving costs, rent for the temporary location, and rental equipment. 


What is not covered by Business Interruption Insurance? 

Business Interruption Insurance is not meant to cover normal business risks such as economic risks or poor business decisions. It is meant to protect your business against accidents and disasters that are out of your control.

Some things that Business Interruption Insurance does not cover include:

How much does Business Interruption Insurance cost?

Business Interruption Insurance is not sold on a standalone basis but can be added to your commercial property insurance policy or bundled with a business owner’s policy. In order to determine pricing for your property policy, insurers will take a look at the risk of loss for your business. Part of this calculation will involve assigning a commercial property insurance rating, which is specific to the building or property you’re looking to insure. The higher risk your business is rated, the higher the premiums will be.

Some of the factors that can affect your premium pricing include:

In order to get an accurate estimate on pricing, it’s best to get a quote from a reputable insurance company. Below we’ve highlighted a few of our trusted partners who offer property policies:

ProviderBusiness IncomeCommercial PropertyBusiness Owner's Policy

What additional Business Interruption Insurance coverage is available?

A number of coverages can be added to your Business Interruption Insurance policy to ensure that you are fully protected from risks that may interrupt your ability to conduct business. Purchased with additional premiums, the following coverages are examples of beneficial additions for your sports and fitness business: 

Extended Business Income Coverage

Extended business income coverage protects against a loss of income that continues during a set time frame after the business has resumed operations and the period of restoration has ended. Typical Business Income Insurance policies only cover lost profits during the period of restoration, but many businesses do not immediately return to the sales levels they had before the loss occurred. After determining your business profits before the period of restoration, extended business income coverage can compensate you for lost profits until you’re able to return to your previous income level. 


Service Interruption

Service interruption coverage protects businesses from property damage and loss due to a utility failure caused by a covered peril. Damage to electrical, gas, water, sewer, and other types of utilities can cause business interruptions, and your service interruption coverage can provide funds to cover these income losses. 


Leader Location 

Leader location coverage provides coverage for direct physical loss, damage, or destruction to a neighboring business that draws customers to your business.


Final Word

Sports and fitness businesses are often very reliant on a physical location or physical property. When this property is damaged, you may be unable to continue your business operations. Business Interruption Insurance is crucial to providing your business with financial protection as you wait for your property to be repaired. Although accidents are inevitable, purchasing adequate coverage helps to ensure that your business is as prepared as possible to face them.

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