There is a particular kind of business failure that happens after a successful insurance claim. The building is rebuilt, the equipment replaced, everything restored — and the business still does not survive, because it had no income for eight months and its customers went elsewhere.
Property insurance restores your assets. Business interruption cover restores your trading. They are different policies, and holding the first without the second is one of the most common gaps we find.
What it actually pays
- The profit you would have earned during the shutdown
- Fixed costs that continue regardless — rent, salaries, loan repayments
- Reasonable extra costs of keeping trading, such as temporary premises
- In some cases, losses caused when a key supplier or customer is hit instead of you
The two numbers that decide everything
Business interruption cover fails in practice for two reasons, and both are decided at the point of purchase rather than the point of claim.
Who needs it most
Any business where a physical event stops the revenue. That is most of them, but it is acute for manufacturers, restaurants and hotels, schools, clinics, warehousing and logistics, and any retailer with a single location.
A consultancy whose staff can work from anywhere is genuinely less exposed. A restaurant with one kitchen is entirely exposed.
Making a claim work
- 1Notify alongside the property claim — they are assessed together
- 2Start a dated record of lost trading days, cancelled orders and turned-away customers on day one
- 3Keep receipts for everything spent to keep trading; much of it is recoverable
- 4Keep management accounts current, because the claim is calculated from them
The fire policy pays to rebuild what you had. Business interruption cover pays for the business to still be there when it reopens.
Still your situation?
General guidance only takes you so far.
This article cannot know your circumstances. A free consultation can — bring your questions, your current policy, or nothing at all.