Calculator inputs
Example data table
| Scenario | Monthly revenue | Margin | Downtime | Policy limit | Estimated payable |
|---|---|---|---|---|---|
| Manufacturing line fire | $250,000 | 35% | 60 days | $500,000 | $262,000 |
| Flooded retail store | $120,000 | 40% | 30 days | $200,000 | $108,000 |
| Supplier shutdown | $300,000 | 28% | 45 days | $400,000 | $214,000 |
Formula used
- Daily revenue = (Monthly revenue × (1 + Seasonality%)) ÷ 30
- Gross profit loss = Daily revenue × Downtime days × Gross margin%
- Continuing expenses = (Monthly continuing expenses ÷ 30) × Downtime days
- Payroll covered adjustment applies if payroll is included in expenses
- Base BI loss = Gross profit loss + Continuing expenses + Extra expense + Claim prep fees − Other income
- Mitigation savings = Base BI loss × Mitigation%
- Adjusted BI loss = Base BI loss − Mitigation savings
- Covered days = max(Downtime days − Waiting period days, 0)
- Covered loss = Adjusted BI loss × (Covered days ÷ Downtime days)
- Required limit = Covered loss × Coinsurance%
- Coinsurance factor = min(Policy limit ÷ Required limit, 1)
- After coinsurance = Covered loss × Coinsurance factor
- Inflation buffer = After coinsurance × Inflation%
- Estimated payable = min(After coinsurance + Buffer, Policy limit)
How to use this calculator
- Enter average monthly revenue and your gross profit margin.
- Set expected downtime days for a realistic disruption scenario.
- Add continuing expenses, extra expenses, and claim preparation fees.
- Enter the waiting period, limit, and coinsurance requirement.
- Click Submit to see the payable estimate and breakdown.
- Use Download CSV or PDF to share the results.
Revenue exposure per day
Daily revenue is the starting point for interruption modeling. The calculator converts monthly revenue to a daily figure using a 30‑day month and applies any seasonality adjustment. For example, $250,000 monthly revenue equals about $8,333 per day. Multiply daily revenue by downtime days to estimate revenue at risk before margin and policy terms. A modest seasonality input helps reflect peak months, protect budgets, and avoid underestimating exposure during high-demand cycles for planning.
Gross margin drives profit loss
Gross profit margin determines how much lost revenue becomes profit loss. A 35% margin on $8,333 daily revenue implies about $2,917 gross profit per day. Over 60 days, that is roughly $175,000 of profit exposure. If margin drops to 28%, the same scenario falls near $140,000.
Continuing expenses and extra expense
Continuing expenses represent costs that still accrue during closure, such as rent, leases, and critical contracts. If monthly continuing expenses are $90,000, downtime of 60 days implies about $180,000. Payroll treatment varies, so a covered share can be applied when payroll is included. Extra expense adds response costs; $30,000 can be reasonable if it shortens recovery.
Waiting period changes covered days
Many policies apply a time deductible, commonly 72 hours. The calculator reduces covered days by the waiting period and scales the loss accordingly. With 60 downtime days and a 3‑day waiting period, the covered fraction is 57/60, or 95%. In shorter events, the impact is larger; a 10‑day outage with a 3‑day waiting period covers 70%.
Coinsurance and limit adequacy
Coinsurance can reduce payment when the limit is below the required amount. The calculator estimates required limit as covered loss multiplied by the coinsurance percentage. If covered loss is $350,000 and coinsurance is 80%, required limit is about $280,000. A $200,000 limit produces a factor near 71%, reducing payable. Adding an inflation buffer and contingency supports limit selection at renewal.
FAQs
1) What numbers should I use for monthly revenue?
Use a recent 6–12 month average, then adjust for expected growth or seasonality. Lenders often prefer conservative assumptions that are easy to document.
2) How do I choose a realistic downtime period?
Base downtime on restoration timelines, supply lead times, permitting, and ramp‑up. Consider best, expected, and severe cases to stress‑test limits.
3) What is a waiting period and why does it matter?
A waiting period is time not covered at the start of the interruption. Short outages can be mostly excluded, while longer events are less affected.
4) How does coinsurance reduce claim payment?
If the policy limit is below the required insured amount, payment can be reduced by a factor. Higher limits often prevent unexpected reductions.
5) Is extra expense always added to the loss?
Extra expense is included here because it can be claimable. In practice, it may be limited or must be tied to reducing the interruption duration.
6) Does this replace an insurance policy review?
No. Policy wording, endorsements, exclusions, sublimits, and period‑of‑restoration definitions drive real outcomes. Use this as a planning estimate, then confirm with your advisor.