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Business Interruption Insurance
Business interruption insurance (also known as business income insurance or business continuity insurance) helps protect your business if something goes wrong and it can’t operate normally. This could be due to events like fires, floods, or other disasters covered by the policy. It also provides ...read more
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What is Business Interruption Insurance?
One of the first things anyone starting a new business is warned about is its uncertainty. Unwelcome surprises or business disruptions impact your business operations, income, and continuity.
This is where business interruption insurance comes into play. It financially covers and compensates your business in such unfortunate scenarios. This can help you manage operational and fixed costs while you focus on creating strategies to become fully operational again.
The coverage of a business interruption policy can vary as per your business’s requirements. On the whole, however, it is suitable for companies that primarily rely on the physical presence or tangible assets to generate revenue.
What Does Business Interruption Cover in the UAE?
Business interruption insurance, or BII, is more than just a financial cover. It is the much-needed safety net that keeps you going despite business disruptions. You get the payout to cover disruptions like natural disasters, fires, and other incidents, while getting your business back up and running. An efficient way to get back on track!
Here’s what a business continuity insurance plan usually covers —
Coverage Scope
- Income Loss - It compensates for the income the company loses while its operations are interrupted.
- Operating Expenses - Business continuity insurance covers operating costs like utilities, rent, and personnel compensation.
Triggering Events
- Physical Damage - Damage to the covered property due to fire or natural disasters can lead to a temporary shutdown or business interruption. This is what this insurance policy covers.
- Contingent Business Interruption - Some business interruption policies in UAE cover interruptions caused by damages to the property of suppliers, customers, or other third parties, on whom the business depends.
Get on Your Feet at Your Pace
Business interruption insurance starts covering your business from the moment it faces a disruption that lasts until your business is back on track. The policy also covers additional expenses your business incurs to mitigate the disruption’s impact.
What are the Types of Business Interruption Insurance in UAE?
The type of business disruption insurance you need depends on your business’s requirements. In general, there are 4 main business interruption insurance types. Here is an overview —
| Standard | Contingent |
|
This is a common type of business interruption policy. It covers loss of income because of direct physical damage to your commercial property (damage because of fire or explosion) that forces you to shut your business down temporarily. |
It financially secures the business in case of income loss due to disruptions at third-party vendors, suppliers, or key customer facilities. Suitable for — UAE businesses depending on international supply chains |
| Extended | Leader Property |
|
This business continuity insurance type covers the income that you lose during the recovery phase, when your business is getting back on track. The coverage is only until your revenue returns to pre-disruption levels. |
It covers the damage and reduced customer footfall that your business experiences due to the fall of the neighbourhood's leading property business. Suitable for — Retail or hospitality businesses operating near hotels, malls, or large commercial spaces |
Who Should Buy Business Income Insurance?
If your business relies on a physical presence or operationally depends on suppliers, business income insurance is a necessary option for you. If your business comes under any of the following types, it’s strongly recommended to select business interruption insurance in UAE —
- Retailers and wholesalers
- Healthcare providers
- Manufacturing units
- IT and consulting firms
- Real estate and construction businesses
- Restaurants and hospitality businesses
How Does Business Interruption Insurance Work?Business interruption insurance is usually not available as a standalone policy. It is purchased alongside policies such as a Property All Risks policy or a Fire and Allied Perils policy.
When selecting the indemnity period, always choose the worst-case scenario. Base it on how long it would take you to get your business back on track. Include factors like staff retention, if required. P.S. The indemnity period is the company’s recovery time and can last for 12 months, 24 months, or 36 months. |
What is Included and Excluded Under Business Income Insurance in UAE?
Here’s what is included and not included under business interruption insurance —
| What’s Covered | What’s Not Covered |
|---|---|
|
|
Which Factors Influence Business Interruption Premiums in the UAE?
The premiums of a business disruption insurance policy depend on several factors. Listed below are the major ones —
- Type and size of business
- Nature and value of the property insured
- Industry sector and claims history
- Number of employees
- Revenue and profit margins
- Location and risk exposure
- Chosen indemnity period
Tips to Save on Business Interruption Insurance Costs
Understand that your business interruption insurance is a plan that covers uncertainty that arises in your business. It does not mean that you, the owner, have no role to play. You need a strong foundation and backup plans in place — not just to help your business survive but also to save on business interruption insurance costs.
Here’s what you can do.
- Develop a foolproof business continuity plan - The plan should include emergency response protocols, alternative operational measures, and communication strategies. Review the plan regularly and update it whenever possible.
- Diversify suppliers and service providers - Expand your supply chain. Relying on a single supplier or service provider concentrates the risk. This can help you minimise business disruptions caused by bankruptcy, production delays, and unexpected situations in a single source.
- Ensure your claim history is clean - A clear claim history makes you appear as a low-risk business owner. This, in turn, reduces your premium rate.
- Compare Quotes - Get quotes from various business disruption insurance plans offered by different insurers and compare them carefully. You can compare plans for coverage limits, exclusions, inclusions, and premiums.
On Policybazaar.ae, you can compare quotes from the top insurance companies in one place.ae.
Why is Policybazaar.ae the Go-to Choice for Business Continuity Insurance?
Policybazaar.ae is your one-stop portal for the best and the right business interruption insurance plan for your company. Here’s what you get when you buy a business continuity policy from us —
- Customisable insurance plans to suit your needs
- Responsive customer support
- Comprehensive plans from the most reliable insurance companies
- Quick and transparent online application process
Frequently Asked Questions
Q1. Why is business interruption insurance necessary for UAE businesses?
Businesses can face interruptions due to various reasons, varying from floods, fire, theft, or business disruptions among suppliers. To cover the resulting losses and ongoing expenses, a business interruption insurance policy is important.
Q2. What is an example of a business interruption insurance claim?
If a fire forces a retail store to temporarily shut down, business continuity insurance can cover lost income during the closure along with ongoing costs like payroll, rent, and taxes until operations resume.
Q3. What are the four main types of business risks?
The four main types of business risks are strategic, regulatory, operational, and reputational.
Q4. What is another name for business interruption insurance?
Business income insurance is another common term used for business interruption insurance. This is mainly because it focuses on covering income lost during disruptions.
Q5. What is a flexible limit of loss in business interruption?
A flexible limit of loss lets you set a broader limit based on the maximum potential loss. It can be applied across different claims like profit loss, extra costs, or rent, offering more flexible protection.
Q6. Can a business disruption insurance plan be customised as per your business requirements?
Yes, you can customise your policy based on your business’s nature. This can help you meet your company’s needs and provide adequate coverage during disruption.
Q7. How does business disruption insurance facilitate financial stability in case of disruptions?
It helps businesses maintain financial stability by covering lost profits and ongoing operational expenses, such as rent and salaries. This way, your business can sustain even if your regular income is disrupted.
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