Could Your Business Survive a Serious Interruption?
Originally published: August 2026 | Last reviewed/revised: August 2026
A fire, hurricane, equipment failure or other event doesn’t have to destroy a business to threaten its survival. Sometimes the greater financial loss occurs afterward, while the business is unable to operate normally.
Revenue may decline or disappear while payroll, rent, loan payments, taxes and other expenses continue. Additional expenses may be necessary to operate from another location, replace damaged equipment more quickly, outsource work or otherwise keep customers from going elsewhere.
Business Income and Extra Expense insurance can help address some of these financial consequences when an interruption results from a covered cause of loss. But insurance is only part of the solution. Planning how your business would respond and recover can be just as important.
For each question, select:
Yes | No | Not Sure
There are no “right” answers. The objective is to identify issues you may want to think about before an interruption occurs.
1. Do you know which parts of your business would be most important to restore first following a serious interruption?
Consider the operations, people, equipment, technology and facilities that are essential to generating revenue and serving customers.
Why it matters:
Not every part of a business has to be restored at the same time. Knowing which functions are critical can help you concentrate limited resources where they will have the greatest effect.
Something to consider:
Identify the operations that must resume first and determine what people, property, technology, suppliers and other resources would be necessary to restore them.
2. Do you know which expenses would continue if your business were unable to operate normally?
Consider rent or mortgage payments, payroll, employee benefits, loan payments, taxes, insurance, utilities, leases and other contractual obligations.
Why it matters:
Losing revenue doesn’t necessarily eliminate expenses. A business may have substantial financial obligations even while it is generating little or no income.
Something to consider:
Separate expenses that would stop or decrease during an interruption from those that would continue. This can help estimate how much financial support the business might need during recovery.
3. Have you estimated how long your business could financially survive with substantially reduced or no revenue?
Consider available cash, credit, reserves and other sources of funding.
Why it matters:
A profitable business can still fail because it runs out of cash before normal operations resume.
Something to consider:
Look at several scenarios, such as a 30-day, 90-day, six-month or longer interruption. Consider how continuing expenses would be paid and how long available financial resources would last.
4. Have you considered how long it could actually take to recover from a major loss?
Repairing physical damage may involve more than construction time. Permits, architectural or engineering work, debris removal, building-code requirements, equipment lead times, contractor availability and supply shortages can extend recovery.
Why it matters:
The amount of time required to rebuild or replace property isn’t necessarily the same as the time required to restore normal business operations.
Something to consider:
Think beyond the best-case scenario. Ask how long recovery could take if contractors, materials, equipment or government approvals aren’t immediately available.
5. Could your business operate temporarily from another location or in another way?
Depending on the business, alternatives might include temporary premises, remote work, renting equipment, outsourcing production, using another company’s facilities or modifying how products or services are delivered.
Why it matters:
Spending additional money after a loss may allow a business to resume operations sooner and preserve revenue, customers and employees.
Something to consider:
Identify realistic alternatives before they’re needed. Extra Expense insurance may help pay certain additional costs incurred to continue operations or reduce the length or severity of an interruption following a covered loss.
6. Have you considered how much it might cost to operate temporarily after a loss?
Temporary operations can involve additional rent, equipment rental, expedited shipping, overtime, temporary technology, moving expenses, advertising and other costs that aren’t part of normal operations.
Why it matters:
The least expensive recovery option isn’t always the best one. Spending $25,000 to avoid losing $100,000 in revenue may make financial sense.
Something to consider:
Think about what you would be willing to spend to keep important operations functioning and customers from going elsewhere.
7. Does your business depend heavily on one location?
Consider whether most or all of your revenue-producing operations occur at a single building or site.
Why it matters:
A single-location business may have little ability to shift operations elsewhere following a loss.
Something to consider:
Determine which activities could be performed elsewhere and which couldn’t. If relocation is possible, identify potential alternatives before they’re needed.
8. Does your business depend heavily on particular equipment, machinery or technology?
This could include manufacturing equipment, refrigeration, specialized machinery, servers, telecommunications, point-of-sale systems or other equipment essential to operations.
Why it matters:
A business may have an interruption even when the building itself is usable.
Something to consider:
Identify critical equipment and determine how quickly it could be repaired or replaced. Preventive maintenance, spare equipment, rental arrangements, equipment breakdown coverage and contingency planning may all be appropriate depending on the circumstances.
9. Have you considered what would happen if a critical supplier or service provider couldn’t operate?
Consider manufacturers, distributors, utilities, cloud providers, telecommunications companies, payment processors and other organizations your business relies upon.
Why it matters:
Your own property doesn’t have to be damaged for your business to be disrupted. A serious loss at another organization can interrupt your supply chain or prevent you from operating normally.
Something to consider:
Identify critical dependencies and possible alternatives. Some business income policies may provide limited coverage for interruptions involving specified dependent properties or services, but coverage varies considerably.
10. Does a significant portion of your revenue depend on one or a small number of customers?
Consider what would happen if an important customer experienced a major loss, closed, relocated or could no longer purchase from you.
Why it matters:
A customer’s problem can become your financial problem.
Something to consider:
Understand how concentrated your revenue is. Diversifying the customer base can reduce this exposure. Certain business income policies may provide coverage for some losses involving dependent businesses, but loss of a customer for ordinary economic reasons generally isn’t an insurable business interruption.
11. Does your business depend on a nearby business, institution, attraction or other location that brings customers or activity to your area?
Examples might include a shopping center anchor tenant, hospital, university, military installation, convention center, stadium, tourist attraction, major employer or large neighboring business.
Why it matters:
Some businesses depend economically on organizations with which they have no direct business relationship. If that “anchor” closes or becomes inaccessible, surrounding businesses may lose substantial revenue.
Something to consider:
Recognize these indirect dependencies when planning for interruption. Some insurance policies may address certain losses involving nearby or dependent properties, but economic loss by itself doesn’t necessarily trigger coverage.
12. Have you considered what would happen if government authorities prevented access to your premises?
Following a fire, hurricane, hazardous condition or other emergency, authorities may close roads, evacuate an area or prohibit access to businesses that haven’t themselves been damaged.
Why it matters:
A business can lose revenue simply because customers and employees can’t reach it.
Something to consider:
Business income policies may include Civil Authority coverage under specified circumstances and for limited periods. The requirements and limitations vary, so don’t assume every government-ordered closure will be covered.
13. Have you considered whether weather could cause a significant financial loss without physically damaging your property?
Examples include excessive rainfall affecting an outdoor business or event, a hurricane causing evacuations or reduced tourism, unusually warm or cold weather affecting seasonal revenue, or weather delaying a project.
Why it matters:
Traditional property and business income insurance generally depends on specific policy requirements being satisfied, often including covered physical loss or damage. A business can suffer a very real financial loss without meeting those requirements.
Something to consider:
Operational planning and financial reserves can help address these exposures. For certain measurable weather events, parametric insurance may also be an option. Unlike traditional insurance, parametric coverage can provide a predetermined payment when an agreed measurable trigger occurs, regardless of the exact amount of physical damage.
14. Do you know approximately how much business income protection your business would need following a major covered loss?
The amount isn’t necessarily the same as annual revenue. A meaningful estimate generally considers expected revenue, expenses that would continue, expenses that would not continue, the time needed to recover and additional expenses incurred to resume operations.
Why it matters:
A business can have Business Income coverage and still have an inadequate amount or an insufficient period of protection.
Something to consider:
Use current financial information to estimate the potential financial effect of a serious interruption. Historical financial statements are useful, but anticipated growth and changes in operations should also be considered.
15. Do you know how long your current business income insurance would continue to provide protection?
Some policies use a dollar limit, some incorporate time limitations, and coverage for certain additional benefits may be subject to separate limits or time periods.
Why it matters:
Reopening the doors doesn’t necessarily mean the financial loss is over. Revenue may take time to return to its pre-loss level.
Something to consider:
Understand both the amount of Business Income and Extra Expense coverage available and how long protection can continue. Pay particular attention to limitations involving the period of restoration and any coverage available after operations resume.
What Did You Learn?
This isn’t a test, and there is no passing score.
Business interruption risk is different for every organization. A professional working from a laptop may be able to resume operations from another location almost immediately. A manufacturer dependent on specialized machinery might need many months to recover from a major loss.
Pay particular attention to your No and Not Sure answers.
Then consider four questions:
- What could interrupt my business?
- How long could the interruption realistically last?
- What would it cost the business while we recover?
- What resources would we use to survive and resume normal operations?
Those resources might include cash reserves, available credit, alternate locations, backup suppliers, contingency plans, traditional Business Income and Extra Expense insurance, parametric insurance for certain measurable events, or a combination of approaches.
The objective isn’t simply to insure the interruption. It’s to give the business a realistic chance of surviving it.
Explore Other Business Risks
Business Income & Extra Expense is one part of a broader risk management program.
Return to the Plapp Insurance Services Business Risk Self-Assessment Series directory to see other available assessments and additional topics as they’re added.
Important Information
Please keep in mind that this assessment does not:
- identify every risk your business faces.
- determine whether your current insurance is adequate.
- recommend particular insurance policies or limits.
- replace professional insurance, legal, accounting, safety, IT or other advice.
It is designed to help you ask better questions.
