Revenue Insurance

Example

“After a kitchen fire forced the restaurant to close for three months, their revenue insurance covered the $75,000 in lost profits and helped pay ongoing expenses like rent and employee wages.”

Memory Tip

Think 'revenue rescue' - this insurance rescues your business income when disaster strikes and stops your money flow.

Why It Matters

Most businesses cannot survive extended periods without income, even if they have property insurance to rebuild. Revenue insurance provides the financial bridge needed to maintain operations, pay employees, and preserve customer relationships during recovery periods, often determining whether a business survives a major loss.

Common Misconception

Many business owners think their general property insurance will cover lost income, but standard property policies only cover physical damage to buildings and equipment. Revenue insurance is typically a separate coverage that must be specifically purchased and properly calculated.

In Practice

ABC Manufacturing has annual revenue of $2.4 million ($200,000 monthly) with a 20% profit margin and $120,000 in fixed monthly expenses. A flood damages their facility, forcing a 4-month closure. Their revenue insurance with a 72-hour waiting period pays: lost profits of $160,000 (4 months × $40,000 profit), plus continuing expenses of $480,000 (4 months × $120,000), totaling $640,000 in coverage. This allows them to relocate temporarily, pay employees, and maintain customer contracts until reopening.

Etymology

Combines 'revenue' from French 'revenu' meaning income or return, with 'insurance' from Latin 'securus' meaning secure, literally meaning securing one's income.

Common Misspellings

Related Terms

More in insurance

Other insurance terms you should know

See Also