Definition - What does Earnings Insurance mean?
Earnings insurance is a type of business interruption insurance. However, instead of a coinsurance structure, it has a monthly limit for the amount of losses that companies can recoup from the insurer. This type of insurance protects companies from losses in earnings related to interruptions that cause the business to stop functioning as usual.
Insuranceopedia explains Earnings Insurance
The benefit of earnings insurance is that the policyholder does not have to pay a coinsurance cost. The downside is that it covers lost earnings only up to a certain point. Therefore, if a company only has earnings insurance without a standard business interruption insurance policy, the company could be in trouble if it experiences an interruption that lasts for a month or longer. For this reason, it may be better for companies to purchase this type of insurance for smaller risks.
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