Texas Property and Casualty License Practice Exam 2025 – All-in-One Guide to Exam Success!

Business interruption insurance is specifically designed to cover a business’s lost income that occurs due to a disaster or an event that disrupts operations. This type of insurance can provide financial support to help a business recover its profits, pay ongoing expenses, and maintain operations when they are unable to produce goods or services due to covered events like natural disasters, fires, or other unforeseen incidents.

For instance, if a fire damages a business property and forces the business to close for repairs, business interruption insurance would help replace the lost income for the duration of the closure, ensuring the business can survive financially until it can resume normal operations.

In contrast, general liability insurance primarily protects against legal claims and liabilities related to bodily injury or property damage caused to third parties, while property damage insurance focuses on compensating for direct physical loss or damage to tangible assets. Workers' compensation insurance provides medical benefits and wage replacement to employees who are injured on the job, which is unrelated to income loss due to business interruptions. Thus, business interruption insurance is the most relevant type of coverage for addressing lost income due to a disaster.