Contents
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Introduction
There are two main types of business interruption insurance: contingent business interruption (CBI), and direct business interruption (DBI). Each type of policy covers different things, so it’s important to understand the differences before choosing a policy.
Contingent Business Interruption
There are two main types of business interruption insurance. The first is contingent business interruption (CBI). This type of insurance provides a lump sum payment to cover losses that result from the insured event. If the business is not able to operate for a certain period of time, the insurer will pay out this lump sum. However, they will only pay out if they are satisfied that the loss is due to the insured event and not something else like bad weather or competition in your market. They may also ask questions about how long it will take you to get back up and running again so that they can calculate how much money they need to give you as compensation.
Direct Business Interruption
Direct business interruption insurance covers the direct, out-of-pocket costs of starting or resuming your business after a disaster. This means that if it’s necessary for you to move temporarily, rent space or pay for contractors to help repair damage from a covered loss—all the expenses related directly to getting your business operational again are covered.
Direct damage caused by smoke or fire in your building is also covered by this type of policy. And some policies offer additional coverage for water damage from burst pipes and other plumbing problems, which can be an important consideration when choosing a policy.
There are two main types of business interruption insurance.
There are two main types of business interruption insurance: contingent business interruption insurance and direct business interruption insurance.
Contingent Business Interruption Insurance (CBI)
Contingent business interruption insurance is a type of business interruption insurance that pays for the difference between the current value of your business and its pre-loss value. In other words, this type of plan will pay you what your company lost in profits due to a covered loss. The amount that you receive from this policy varies based on whether or not there was any damage in addition to your building being closed for repairs or relocation after an event like fire or flood. If damage does occur, some plans will also cover expenses related to temporary facilities (such as renting office space or tools), equipment costs associated with getting back up and running again, etc.
Conclusion
Business interruption insurance can be a lifesaver when it comes to preventing financial ruin. It’s important to understand the difference between the two types of business interruption insurance and which one is right for your company. At its core, BI is meant to protect against loss if your business is unable to operate due to unexpected events like fire or flooding
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