If your business relies a lot on one or two suppliers or business partners in order for your work to run smoothly, contingent business interruption (CBI) insurance is for you. This is often an extension of another insurance plan and works as an extra expense coverage in case of work flow interruption.
A particular supplier, business, or customer can be named in the policy, or a policy can be purchased that covers all customers and suppliers. The need to cover a particular customer may arise if your business relies on one or two main clients for the majority of your business. If something were to happen to that business to delay their ability to purchase your product or service, contingent business interruption insurance could cover your loss.
Often contingent business interruption policies are added on to property insurance plans since a claim can come in the form of damages incurred after physical damage occurs to a customers’ or suppliers’ property. Alternatively, a CBI can be an add-on to data breach insurance if the business interruption that would most affect your business stems from cyber attack interruptions.
Examples of business interruption claims
There are a variety of ways in which your business work flow could be interrupted. An example from the cyber liability world is if your customer database or computer production line is hacked and causes your business a loss of income due to a loss of service until systems are restored and security is back up and running. Similarly, if you rely on the system’s of a third-party, you could suffer a loss if that system were hacked.
Another example is if a neighboring business acts as a “leader property” by serving to attract customers to your business. If something were to happen to their company, for example a fire, your business may suffer significantly as well. This is where business interruption insurance could really benefit you.
What would happen to your business if your largest supplier stopped supplying their products to you for a month? These kinds of incidents can easily happen due to factory property damage, cyber attacks, transportation disruption, etc. Place a business interruption policy on your main supplier and you can rest assured that you will also be covered financially for these kinds of circumstances.
How can independent insurance agents help?
Think you may need your own contingency business interruption insurance? The best first step to take is to contact your independent insurance agent and talk with them about your options. If you don't have an agent, it's a great idea to find one. They can be a very valuable resource as you examine what kind of coverage you need. It can make all the difference to know the details of your contingency business interruption add-on to ensure you will get the coverage you expect. Not all plans are the same and each business has unique needs.
Book an appointment with one of our independent insurance advisors today and they can begin answering your questions and set you on the right path. Want to know more about cyber liability insurance and the various add-ons and details to consider? Check out our free ebook below.