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By Lynton Hartill
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For Ireland’s large enterprises, disruption isn’t just an inconvenience - it can hit revenue, operations, and reputation hard. Fires, floods, storms, or other insured events can halt business, yet many companies underestimate the financial impact of downtime. Business Interruption Insurance is a strategic tool that bridges the gap, protecting income and covering essential extra costs while your business recovers.
Bespoke extensions can also help cover losses from utility outages, contamination or cyber-related incidents. While contamination and cyber insurance is separate from standard Business Interruption Insurance, procuring the two ensures a more resilient approach to modern operational risk, business continuity and resilience.
Why Business Interruption Insurance Matters
Large companies face complex risks: multi-site operations, global supply chains, high fixed costs and contractual obligations. In my experience, when disruption occurs - whether from physical damage, utility outages, or other unexpected events - its impact can ripple across multiple departments, locations and even markets. Business Interruption Insurance is about more than simply covering financial losses; it plays a critical role in maintaining stability, operational continuity and customer confidence. The right cover ensures that a company can continue meeting obligations while protecting the business, giving leaders the confidence to navigate challenging situations effectively.
Examples of Insured Events
Business Interruption Insurance is generally triggered by physical damage to insured property, including:
- Fires or explosions
- Floods or storm damage
- Accidental damage to buildings, plant, or equipment
- Theft or vandalism resulting in business interruption
Bespoke wordings and extensions can broaden cover to include non-damage incidents such as utility failures, contamination, cyber incidents or restricted access.
What Business Interruption Insurance Covers
Business Interruption Insurance primarily protects a company’s sales income and fixed costs during downtime caused by an insured event. Variable costs also need attention. Core benefits include staff salaries or part thereof, lease payments and supplier contracts, as well as additional costs of working such as temporary premises, outsourcing, or expedited shipping.
Extensions to Consider & Bespoke Cover
Business Interruption Insurance can be tailored to reflect the unique risks and operational dependencies of a large organisation. Optional extensions and bespoke wording allow companies to protect against a wider range of scenarios that could interrupt business operations beyond physical damage to their premises.
These include:
- Loss of public utilities like electricity, water or telecom outages
- Denial of access & loss of attraction due to nearby incidents and events
- Loss of attraction affecting customer footfall due to events in the surrounding area
- Specified/unspecified supplier’s extensions
- Specified/unspecified customer’s extensions
Key Elements and Consideration:
When reviewing Business Interruption Insurance, several factors are critical:
1. Indemnity Period - This is the maximum length of time the policy will provide cover after an insured event. Large companies should consider realistic recovery timelines, including rebuilding, staff retraining, equipment replacement, and market recovery.
2. Material Damage Proviso - Most policies require insured physical damage to trigger cover. Aligning property insurance and Business Interruption Insurance is essential to avoid gaps in risk management.
3. Insurance Gross Profit - Business Interruption Insurance is often based on insurance gross profit. Using incorrect figures can lead to underinsurance and reduced payouts. The Gross Profit calculation should align with policy definitions. Some risks are more suited to Gross Revenue cover and others are suited to (Additional) Increased cost of Working.
4. Enhancements - Consider whether your business needs additional cover for contingent risks, denial of access, utility outages, contamination or cyber events.
Limitations
Business Interruption Insurance generally does not cover pandemics, pollution or contamination, cyber incidents (unless specifically added), gradual losses, or non-damage events, so optional extensions should be considered to fully protect operations.
Planning Your Next Steps
Whether your business already has Business Interruption Insurance or is considering it for the first time, it’s important to ensure your cover reflects your current operations, multi-site dependencies and risk landscape.
At Arachas, our Corporate Practice team can help assess your Business Interruption exposure, identifying both what can be insured and where gaps may exist. If you would like guidance reviewing your existing policies or exploring new options, we can help ensure your insurance supports your business continuity and resilience.
Arachas Corporate Brokers Limited t/a Arachas is regulated by the Central Bank of Ireland. Company registration number: 379157