7.

Business interruption
insurance policy

“The best way to predict the

future is to create it”
Einstein
BUSINESS INTERRUPTION COVERAGE
• The Business Interruption (BI) cover indemnifies for loss of Gross
Profit due to diminished business volume and increased cost of
operations, as a consequence of an event covered by a property
damage insurance

• The scope of the insurance is returning the Insured Company to the

state it was before the event (the cause of interruption).
COVERAGE HIGHLIGHTS
• The Company is indemnified if operations are
interrupted due to an event that causes material
damages and is covered through an insurance policy.

• A second type (Contingent Business Interruption) is

caused by the loss of a strategic supplier / client
(Dependency based)
COVERAGE HIGHLIGHTS
• This insurance line looks to two indemnity tools: value and
time.

• The sum insured results from a complex formula, which

may vary from one insurer to the next;

• The maximum indemnity period represents the maximum

period after which the company should be functioning at a
normal level. The indemnity will be granted for no longer
than this period of time.
COVERAGE HIGHLIGHTS

• BI is granted as extension to a material

damage coverage, that can take the form of a
property damage policy or the more specific
type of electronic equipment, machinery
breakdown coverage etc.
• It may also appear as “Increased Cost of
Working” (ICOW), a coverage customised for
companies without manufacturing operations.
Risk Profile
• It is often seen that consequences of a material damage, even
indemnified, have a long lasting impact on the company. A
company continues to fight losses, sometimes recovery being
rather difficult.

• The most at danger companies for serious difficulties, even

bankruptcy, are those that depend on a certain location or on
specific, high-tech machinery.
Underwriting information required
• A specially designed questionnaire needs to be completed in
order to evaluate the risk for business interruption. The
questionnaire looks at, amongst other:

the supply of complete data regarding the operations and

the business processes
data on the company’s revenue and expenditures

• information on previous losses

Thank you!