Business Interruption Insurance in the UAE

Business Interruption Insurance may cover eligible financial losses when a business cannot operate normally following insured physical loss or damage. It is commonly arranged alongside a Property All Risks or Fire and Allied Perils policy and is sometimes referred to as Loss of Profit Insurance.

Cover is not triggered simply because a business closes or its income falls. The interruption must normally result from physical damage covered under the associated property policy. All claims remain subject to the issued schedule, definitions, limits, time excess, indemnity period, conditions and exclusions.

What Business Interruption Insurance May Cover

Depending on the issued policy, eligible losses may include:

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

Increased cost of working may include the cost of using temporary premises, hiring substitute equipment or outsourcing certain activities. These costs must generally be necessary, reasonable and within the applicable policy limit.

Who May Need Business Interruption Insurance?

This insurance may be relevant to businesses that:

1. Depend on physical premises, machinery or stock to generate revenue.
2. Have continuing expenses during a temporary interruption.
3. May need temporary premises or substitute equipment after property damage.
4. Depend on important suppliers, customers or utility services.
5. Are required to arrange cover by a lender, landlord or contract.

Important Policy Conditions

1. Insured physical damage: The interruption must normally follow damage accepted under the related property policy.
2. Gross-profit declaration: The sum insured should follow the definition and calculation method stated in the policy.
3. Indemnity period: Cover applies only during the selected maximum period in which business results are affected.
4. Time excess: A waiting period may apply before eligible interruption losses begin to be calculated.
5. Financial records: Accounts, turnover records, expense details and other supporting documents may be required.
6. Material changes: Changes to activities, locations, turnover or business dependencies should be disclosed to the insurer.

Selecting 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 required to repair or rebuild the premises, replace machinery, obtain approvals, restore utilities, replenish stock and recover normal trading levels.

The interruption may continue after physical repairs have been completed. However, financial losses continuing beyond the selected indemnity period are not normally covered.

Optional Extensions

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

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

Common Exclusions and Limitations

Business Interruption Insurance commonly excludes or restricts:

1. Uninsured property damage: Interruptions caused by an event excluded under the associated property policy.
2. Closures without physical damage: Unless a specific extension expressly provides cover.
3. Underinsurance: An inadequate gross-profit sum insured may reduce an otherwise eligible claim.
4. Loss beyond the indemnity period: Financial effects continuing after the selected maximum period.
5. Fines and contractual penalties: Including liquidated damages and obligations accepted only under contract.
6. Cyber incidents: Cyberattacks, malware, data loss and system failures 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. 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, expense, payroll and production records.
5. Record additional costs incurred to reduce the interruption.
6. Retain invoices, contracts, repair reports and financial statements.
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 business activities, locations, turnover, gross profit, continuing expenses, dependency risks, recovery arrangements, the requested 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, customer or utility 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 their initial operational and financial 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 documents for assessment under the issued policy.

Frequently Asked Questions