Dubai 
ParisBusiness interruption and contingent business interruption coverage
Insurance coverage for operational disruption often extends beyond physical damage to a company’s own premises. In many cases, businesses may suffer significant financial loss because suppliers, logistics providers or key customers are unable to operate as expected.
Business interruption (BI) policies are commonly designed to protect against loss of revenue resulting from operational disruption. However, many policies also contain extensions that may respond where disruption affects third parties within a company’s supply chain.
These provisions, often referred to as contingent business interruption (CBI) coverage, may apply where a business suffers financial loss because a key supplier, customer or service provider experiences disruption. In periods of regional uncertainty, events affecting shipping routes, transportation infrastructure, energy supply or regulatory access may have a direct impact on commercial operations even where a company’s own facilities remain fully operational.
Businesses reviewing their insurance arrangements may therefore wish to consider:
- whether their policies include contingent business interruption coverage
- whether extensions such as prevention of access, denial of access or public authority restrictions may apply
- whether losses resulting from disruption to suppliers, ports or transportation routes may fall within policy coverage
- whether waiting periods, deductibles or financial sub-limits apply to these extensions
In many cases, policy wording can vary significantly between insurers, and careful analysis may be required to determine whether coverage may be available. Early review of policy terms can also assist organisations in preserving coverage and ensuring that notification requirements are satisfied.
If you or your organisation would like to discuss any aspect of this guidance note further, please reach out to your usual CVML contact, or email:
Hisham E. Oweiss, Partner, CVML (h.oweiss@cvml.ae)
Firas Zegallai, Associate, CVML (f.zegallai@cvml.ae)