What type of expenses does business income coverage typically exclude?

Business income coverage is designed to compensate for loss of revenue that occurs due to a covered event that disrupts normal business operations. However, it typically excludes net profits that weren't realized. This means that any profits that a business anticipated earning but did not actually realize due to the interruption are not covered. Coverage is focused on the actual income lost as a result of the interruption rather than potential earnings that could have occurred.

Net profits that weren't realized would suggest a hypothetical scenario—earnings that could have been made if the disruption had not occurred. Insurance coverage is based on actual losses rather than speculative or projected profits, which aligns with the principle of indemnity in insurance—aiming to restore the insured to their previous financial position without providing a profit.

In contrast, legal fees incurred during business interruptions, costs of moving operations, and employee salaries during a loss may often be covered under specific conditions or policy provisions, depending on the particular terms of the business income coverage. These aspects can sometimes be necessary for mitigating the impact of the loss, thus making them more likely to be included in coverage rather than excluded.