Business income insurance covers the income of the business, therefore, it's fundamental that there be earnings and that earnings continue to be possible. If a business is idle and likely to remain that way for a long time, there are neither present nor prospective earnings and no need for business income coverage. Construction companies and contractors may face this situation when there's a significant slowdown in large projects.
But the mere fact that a business is not operating doesn't necessarily eliminate the need for this coverage. If a contractor is definitely scheduled to resume operations but the property is damaged or destroyed by an insured peril, there will be a loss of income and, hence, a business income exposure. The exposure begins on the date operations were scheduled to resume. A seasonal business, such as an ice cream shop in a vacation area, is one example.
Similarly, insurance can be written for a business operator whose premises are under construction. Loss to an uncompleted building postpones the date of occupancy, and any loss of earnings from the date business operations should have begun can be insured. Contractors and their clients often deal with this situation.
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