What is the purpose of a business interruption insurance policy?

The purpose of a business interruption insurance policy is to cover the loss of income that a business experiences due to a temporary shutdown of operations, typically caused by a covered peril such as fire, flood, or other disasters. This type of policy helps businesses mitigate the financial impact that can ensue from unexpected interruptions by compensating for the loss of revenue during the downtime and may also cover ongoing expenses that must be paid even when the business is not operational.

The other choices do not accurately reflect the primary function of business interruption insurance. Funding for new ventures pertains to startup costs and investments, which is outside the scope of business interruption coverage. Insuring against fraud is addressed through different types of insurance, such as crime insurance. Lastly, protecting against liability claims relates to general liability insurance, which covers legal responsibilities for injury or damage to third parties, rather than income lost due to business operations being halted.