Business Interruption Insurance

A type of insurance that provides financial compensation for lost income due to a business being unable to operate as usual.

Business Interruption Insurance

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What is Business Interruption Insurance?

Business interruption insurance is a type of liability insurance coverage that helps replace business money or income that suffered a direct physical loss or damage due to some sort of disaster, maybe fire or any natural disaster. These insurance plans mainly cover claims due to flood, fire, and property-related physical damages that might result in destructive impacts, theft, and vandalism. 

This type of insurance aims at bringing your business back on track like it was before the loss, damage, or disaster took place. Furthermore, business interruption insurance covers and exclusively takes care of the company’s loss of income during those periods of time when the company as a whole is unable to carry forward the business at its normal frequency due to the tragic and damaging event.

Who Needs Business Interruption Insurance?

Business types that perform their regular business activities and revenue generation through a commercial property are eligible to have a business interruption policy. On the other hand, companies who have a hard time paying salaries to their employees or fail to successfully cover around a month’s worth of payroll and additional overhead expenses of their employees should definitely buy business revenue insurance

Moreover, companies in the UAE with business in the following sectors should definitely consider owning business interruption insurance.

  • Public and private companies of all types and sizes
  • Consulting-based companies
  • Companies that majorly earn revenue through their building design services
  • All forms of food and beverage companies
  • Information Technology/ IT services company (Private and Public)
  • Hospitals, clinics, and healthcare professionals
  • Retail companies of different types
  • Private and public wholesale companies
  • Big, small, or mid-sized manufacturing industries
  • Mid-sized or large real estate companies
  • Different types of wholesale companies are commencing the business of any size

Apart from this, entrepreneurs of small-sized businesses can opt for small business interruption insurance to secure their small firm, company/ industry from all sorts of natural disasters or unwanted accidents.

Why Get Business Interruption Insurance?

Here are some reasons to get insured for business interruptions –

  • Provides insurance coverage when, due to the damages caused on non-owned properties, terminates or reduces business owners’ earnings.
  • Suppliers’ requirements for materials, parts or services are necessary for production and offering services.
  • Keeping sole buyers satisfied by supplying products, goods, or services without any break.
  • Assists in consistent production in manufacturing units and taking forward orders accordingly.
  • Transporting manufactured products to anchor stores, sports or entertainment venues, and to any other place that drives the maximum number of customers.

Common Risk Scenarios

  • Reporting errors
  • Direct shareholder/investor claims
  • Breaches of fiduciary duties owed to the company and shareholders
  • Shareholder actions
  • Regulatory investigations/actions
  • Inaccurate or inadequate disclosure
  • Derivative shareholder/investor claims
  • Corporate manslaughter
  • Creditor claims
  • Misrepresentation in a prospectus
  • M&A litigation
  • Competitor claims
  • Failure to comply with regulations or laws
  • Employment practices and HR issues

Major Inclusions of Business Interruption Insurance

An interruption insurance policy for businesses offers coverage for:

  • Coverage for profits or revenue earned

As per reports from previous months, the business interruption insurance will provide reimbursements for profits and earnings that would come naturally in case the destructive event did not occur. 

  • Taking care of fixed costs

This mainly comprises necessary additional expenses for business and all operational costs. 

  • Province of shifting to a temporary location

In general, most Business Interruption Policy Covers the costs required for the company to relocate and carry on with their operations and productions temporarily. Such a situation might arise when the damage largely affected the commercial property, which led to a halt in the company's operations. 

  • Covering all sorts of commission and training costs

In most cases, when a company or business undergoes damages, they might need to replace machinery and invest in training to guarantee smooth operations. The business interruption insurance covers all such expenses. 

  • Coverage for civil authority egress/ ingress

In the occurrence of a business operation event, the Government might strictly order the closure of the business premises. Forced closures might also include street closures and mandatory curfews. These Government mandates might cause large financial losses for the company, which is taken care of by the business interruption insurance exclusively. 

  • Loan payments and taxes

Most loans require monthly payments. Thus, business interruption insurance bears these expenses when the company fails to generate income due to the damage caused. Additionally, business interruption insurance also offers coverage for on-time tax payments in order to avoid any form of penalties. 

Apart from these, business revenue insurance also helps business owner to pay their employees so that they do not lose any of them when they get back on track with their business operations. 

Major Exclusions of Business Interruption Insurance

Business Interruption insurance typically does not cover the following:

  1. The business interruption event might result in multiple broken items, but the insurance does not offer coverage for broken glass items.
  2. Communicable diseases like COVID-19, pandemics or viruses.
  3. Damages to the utilities.
  4. Any sort of undocumented income holds no relevance to any business financial reports.
  5. Some other policies exclusively cover natural calamities such as earthquakes or floods. 

Factors Determining The Pricing of a Business Interruption Policy

  • Commercial Property 
  • Domicile & International activity 
  • Claims 
  • Industry Sector institutions are considered high risk 
  • Stock exchange listing 
  • Market Capitalization 
  • M&A activity 
  • Nature of business 
  • Revenue 
  • Sharing holding pattern 
  • Net worth of the company 
  • P&L 
  • Number of employees (Geographical bifurcation)

Business Interruption Insurance is essential for businesses that want to maintain their operations during times of distress. It can help protect a company's income and cover additional expenses incurred during the disruption. To make sure you get the best coverage for your business, it is important to consult with experienced professionals who can advise you on the most suitable policy for your needs. With the right coverage in place, you can be confident that your business will continue to function even during turbulent times.


Q1: What is Business Interruption Insurance in UAE?

Ans: Business Interruption Insurance in UAE offers financial coverage to companies in the event of an unforeseen interruption to their business operations. Such type of insurance also covers financial losses of a damaged property which leads to temporary interruptions in operations. 

Q2: Who is eligible for Business Interruption Insurance in UAE?

Ans: Business Interruption Insurance is designed for all businesses operating in the UAE that rely on physical assets and workplace location to operate seamlessly. 

Q3: What items are covered in the Business Interruption Insurance in UAE?

Ans: Here are the general inclusions of Business Interruption Insurance in case of any event that causes losses -

  • Loss of profits due to unfortunate events 
  • Covers fixed costs
  • Employee wages 
  • Training and commission costs 
  • Temporary workplace location
  • Due loan payments 
  • Taxes and penalties if any 
  • Damaged property costs

Q4: What elements are excluded from Business Interruption Insurance?

Ans: Some of the general exclusions from the coverage of Business Interruption Insurance are as follows - 

  • War, sabotage, terrorism, and more
  • Nuclear risks
  • Voluntary damages to the property
  • Machinery and plant breakdown
  • Loss of money, cheque, or any evidence of debt, and more 

Q5: How will my premium be determined in the Business Interruption Insurance?

Ans: The premium will depend on factors like industry type, level and amount of coverage, number of existing employees, and the history of prior claims (if any). 

Q6: What are the key benefits of Business Interruption Insurance in the UAE?

Ans: The key benefits of Business Interruption Insurance for businesses include the comprehensive coverage that it offers along with the continuity of operations even under any unfortunate circumstance. The policy also offers customisable add-ons as per the specific needs of the business.