Commercial Policy Knowledge Centre
Property / Financial Loss
Policy guide
Business Interruption Insurance
A time-element cover intended to protect insured earnings and specified continuing costs after an interruption caused by insured physical damage, subject to the selected basis and extensions.
01
Who needs it
- Businesses whose revenue depends on premises, machinery, utilities, suppliers, customers, logistics hubs, or a small number of critical locations.
- Manufacturers, hotels, retailers, healthcare providers, schools, warehouses, contractors, and professional operations with continuing fixed costs.
- Companies that would need temporary premises, outsourcing, overtime, emergency freight, or alternative production after damage.
- Organisations with lender, investor, or contractual expectations around continuity and financial resilience.
02
Core cover
- Loss of insured gross profit, gross revenue, rental income, or another agreed financial measure during the indemnity period.
- Increased cost of working reasonably incurred to avoid or reduce the insured loss, within the wording’s economic limit.
- Specified continuing expenses, payroll, or additional increased costs when included in the selected basis.
- Extensions for named suppliers, customers, utilities, prevention of access, public authority, or other dependencies when expressly included.
03
What is commonly not covered
- Pure delay, loss of market, or reduced demand without the required insured-damage trigger.
- Interruption caused by a peril excluded under the material-damage policy or outside the insured location and extension structure.
- Fines, penalties, liquidated damages, or contractual liability unless specifically covered.
- Loss continuing beyond the maximum indemnity period, even if the business has not fully recovered.
- Cyber, disease, supply-chain, utility, or denial-of-access events unless the wording grants the relevant trigger and scope.
04
Underwriting information
- Audited accounts, management accounts, budgets, turnover, gross profit, uninsured working expenses, payroll, and seasonality.
- A defensible BI worksheet using the policy’s defined basis rather than an accounting label that merely sounds similar.
- Realistic rebuild, replacement, permitting, testing, re-certification, customer-recovery, and supply-chain timelines.
- Critical suppliers, customers, utilities, logistics routes, outsourced processes, intercompany dependencies, and alternative capacity.
- Business-continuity plans, mitigation options, available stock, spare capacity, reciprocal arrangements, and prior interruption losses.
05
Common mistakes
- Selecting a 12-month indemnity period when rebuilding, importing machinery, and recovering customers may take much longer.
- Confusing accounting gross profit with the policy’s insured gross-profit definition.
- Failing to include expected growth, inflation, new contracts, or changing dependency exposure.
- Assuming unnamed suppliers, customers, utilities, or port disruption are automatically covered.
- Buying BI without aligning it to the property policy, machinery cover, cyber programme, and actual continuity plan.
06
Claims issues
- Proving that insured physical damage triggered the interruption and identifying the correct start and end of the indemnity period.
- Calculating the counterfactual result using trends, seasonality, growth, market conditions, saved expenses, and mitigation.
- Distinguishing normal operating weakness from loss caused by the insured event.
- Documenting increased costs and showing how they reduced or avoided a larger insured loss.
- Coordinating accountants, adjusters, operations teams, property repairs, and insurer information requests from the first day.
07
Critical wording points
- Material-damage proviso and the exact insured trigger.
- Gross-profit, revenue, standing-charge, payroll, and uninsured-working-expense definitions.
- Maximum indemnity period, waiting period, monetary deductible, and sublimits.
- Trends clause, savings, increased cost of working, and additional increased cost of working.
- Suppliers, customers, utilities, prevention of access, public authority, disease, cyber, and other extension wording.
Related policies
Property All RisksMachinery BreakdownCyberMarine CargoTrade Credit
Policy-wording boundary
This guide explains common market structures. Actual coverage may depend on the insurer, jurisdiction, schedule, declarations, endorsements, definitions, exclusions, conditions, facts, and complete policy wording. Obtain professional advice and written insurer confirmation for a specific risk or claim.