Business interruption insurance explained

What is business interruption insurance?

Business interruption (BI) insurance covers lost income and ongoing fixed costs when a covered event — such as a fire, flood, or other insured damage — prevents your business from trading normally. It is designed to put your business back in the financial position it would have been in had the interruption not occurred.

What does it cover?

A standard BI policy typically covers: lost gross profit or revenue during the interruption period; ongoing fixed costs (rent, salaries, utilities) that continue even when you cannot trade; and increased costs of working (for example, renting alternative premises or emergency equipment hire). The trigger is usually physical damage to your premises by an insured peril.

What it typically does not cover

Standard BI policies are usually triggered by physical damage. Non-damage events — such as a loss of key personnel, supply chain disruption, or a pandemic — are typically excluded unless you have specific extensions. Cyber-related interruption may require a separate cyber insurance policy.

Choosing the right indemnity period

The indemnity period is the maximum time the insurer will pay out. Be realistic about how long it would take to get back to normal — for some businesses, rebuilding, restocking, or regaining customers could take much longer than 12 months. Under-buying the indemnity period is a common mistake.

How much cover do you need?

Use our business interruption calculator to estimate your BI exposure based on your gross profit or fixed costs, payroll, and expected recovery period. A commercial insurance broker can help you structure the right policy for your business.