Earnings Insurance

What Does Earnings Insurance Mean?

Earnings insurance is a type of business interruption insurance that, instead of following a coinsurance structure, sets a monthly limit on the amount of losses a company can recover from the insurer. This insurance protects businesses from earnings losses due to interruptions that disrupt normal operations.

Insuranceopedia Explains Earnings Insurance

The benefit of earnings insurance is that the policyholder avoids coinsurance costs. However, a drawback is that it only covers lost earnings up to a set limit. This means that if a company relies solely on earnings insurance without a standard business interruption policy, it may face financial strain if an interruption lasts longer than a month. For this reason, earnings insurance may be more suitable for covering smaller risks.