Business Interruption Insurance in the UAE

Business Interruption Insurance may protect a business against eligible financial losses when its operations are interrupted by physical loss or damage covered under a linked Property All Risks or Fire and Allied Perils policy. It is also commonly referred to as Loss of Profit Insurance.

The policy does not respond simply because a business cannot operate. The interruption must normally result from insured physical damage at a declared location, and the related property claim must fall within the underlying policy. All cover is subject to the issued schedule, limits, time excess, conditions and exclusions.

What Business Interruption Insurance May Cover

Depending on the issued policy, cover may include:

1. Loss of gross profit: An eligible reduction in turnover and resulting loss of insured gross profit during the interruption.
2. Standing charges: Insured continuing expenses that remain payable while business activities are reduced or suspended.
3. Increased cost of working: Reasonable additional expenses incurred to avoid or reduce a loss of turnover following insured damage.
4. Auditors’ fees: Reasonable fees for preparing or verifying claim information, when expressly included.
5. Loss of rent: Eligible rental-income loss may be considered when specifically declared and insured.

Increased cost of working may include expenses such as temporarily renting another premises, hiring substitute equipment or outsourcing certain activities. These costs must generally be necessary, reasonable and within the applicable policy limit.

Important Policy Conditions

1. Underlying property damage: The interruption must normally follow physical damage covered under the linked property insurance policy.
2. Indemnity period: Cover applies only during the selected period in which insured results are affected by the damage, subject to the policy limit.
3. Time excess: A waiting period may apply before eligible interruption losses begin to be calculated.
4. Gross-profit calculation: The declared amount should follow the definition and calculation method stated in the policy.
5. Business records: Financial statements, turnover records, expense details and other supporting documents may be required.
6. Material changes: Changes to locations, activities, turnover, dependency arrangements or business operations should be disclosed.

Choosing an Indemnity Period

The indemnity period is the maximum period during which an eligible interruption loss may be covered. It should consider the time reasonably needed to repair or rebuild the premises, replace equipment, obtain approvals, restore utilities, replenish stock and recover normal trading levels.

The period does not necessarily end when physical repairs are completed. However, losses continuing beyond the selected maximum indemnity period are not normally covered.

Optional Extensions

Subject to underwriting acceptance, extensions may be considered for denial of access, damage at suppliers’ or customers’ premises, public utilities, prevention of access, infectious disease or other specified dependencies.

These circumstances are not automatically covered. Each extension must be expressly included and may have separate definitions, territorial limits, sub-limits, waiting periods and exclusions.

Common Exclusions and Limitations

Business Interruption Insurance commonly excludes or restricts:

1. Uninsured property damage: Interruptions resulting from a cause excluded under the linked property policy.
2. No physical damage: Closures or reductions in business without insured physical loss or damage, unless a specific extension applies.
3. Underinsurance: An inadequate gross-profit sum insured or declaration may reduce an otherwise eligible claim.
4. Loss beyond the indemnity period: Financial effects continuing after the selected period has expired.
5. Penalties and contractual liabilities: Fines, penalties, liquidated damages and liabilities accepted only under contract.
6. Cyber incidents: Cyberattacks, malware, data loss and system interruption may require separate Cyber Insurance.
7. Excluded events: War, nuclear risks, deliberate acts and other exclusions stated in the policy.

What to Do After an Incident

1. Protect people and take reasonable steps to prevent further property damage.
2. Notify Al Buhaira Insurance as soon as reasonably possible.
3. Record when and how business operations were affected.
4. Keep sales, payroll, expense and production records.
5. Record additional expenses incurred to reduce the interruption.
6. Retain invoices, contracts, photographs and repair reports.
7. Cooperate with requests for financial and operational information.

How to Request a Quotation

Businesses can submit initial information through Al Buhaira Insurance’s dedicated Business Interruption quotation page. The assessment may consider the business activities, locations, turnover, gross profit, fixed expenses, dependency risks, recovery plans, required indemnity period and claims history.

A quotation does not confirm that cover has started. Insurance begins only after the required information has been reviewed, the offered terms have been accepted and the applicable policy documents have been issued.

Documents Required

The insurer may request documents and information such as:

1. Completed proposal or quotation form
2. Trade licence and company details
3. Related Property All Risks or Fire Insurance details
4. Audited financial statements
5. Turnover and gross-profit records
6. Gross-profit calculation or declaration
7. Fixed and variable expense details
8. Requested indemnity period
9. Business locations and activity details
10. Business continuity and recovery information
11. Key supplier or customer dependency details
12. Previous insurance details and claims history

Why Choose Al Buhaira Insurance?

1. Property insurance range: Business Interruption Insurance is available within Al Buhaira Insurance’s property insurance products.
2. Dedicated quotation page: Businesses can submit initial financial, operational and property details online.
3. Business-based assessment: Quotations can consider declared turnover, gross profit, expenses, locations and the requested indemnity period.
4. Policy enquiries: Customers may contact Al Buhaira Insurance regarding issued schedules, calculations, conditions and endorsements.
5. Claims enquiries: Policyholders can report an interruption and submit supporting financial information for assessment.

Frequently Asked Questions