Business interruption insurance: indemnity period, gross profit and what gets paid
By the TRS broking team24 Oct 20266 min read
The short answerBusiness interruption pays the gross profit a business loses, and the extra costs it incurs, after insured damage to its property stops or slows trading. It pays for the indemnity period chosen on the policy, so that period must cover the full time needed to recover, not just to rebuild.
What triggers a claim?
Business interruption normally follows insured physical damage, such as a fire, under the property policy. Without covered damage, there is usually no BI claim.
How is the indemnity period set?
It is the time from the damage until the business is trading as before. Rebuilding, re-equipping and winning back customers all take time; 12 months is often too short for manufacturers.
| Item | What to get right |
|---|---|
| Indemnity period | Rebuild time plus recovery of sales |
| Sum insured | Gross profit for the full indemnity period |
| Extra costs | Temporary premises, overtime, outsourcing |
| Suppliers and customers | Extensions for damage at their premises |
Want this checked against your own policies?Talk to a broker
What is the average clause?
If the gross profit insured is below the actual figure, a claim can be reduced in proportion. Recalculate the sum insured every year.
Frequently asked questions
Does BI cover a pandemic closure?
Most policies exclude closures without physical damage, including disease outbreaks, unless a specific extension applies.
Related cover
Business interruption insuranceProtect your revenue when operations pauseCommercial property insuranceResilience for your operational infrastructure
General information only, not advice on any particular policy. Cover depends on the policy wording and the insurer's terms.