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 with a Property All Risks or Fire and Allied Perils policy and may also be described as Loss of Profit Insurance.

Cover is not triggered simply because a business closes, experiences lower sales or faces operational difficulties. The interruption must normally result from physical damage covered under the associated property policy. Cover remains 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 business expenses that continue 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 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 temporary premises, substitute equipment or outsourced services. Such expenses must generally be necessary, reasonable and within the applicable policy limit.

Who May Need This Insurance?

Business Interruption Insurance may be relevant to organisations that:

1. Depend on physical premises, machinery or stock to generate revenue.
2. Have continuing expenses during a temporary interruption.
3. May require temporary premises or substitute equipment after property damage.
4. Depend on important suppliers, customers or utility services.
5. Must arrange cover under a finance agreement, lease or commercial contract.

Important Policy Conditions

1. Insured damage: The interruption must normally follow physical 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: This is the maximum period during which an eligible interruption loss may be covered.
4. Time excess: A waiting period may apply before eligible losses begin to be calculated.
5. Financial records: Accounts, turnover records, expense details and other evidence may be required.
6. Material changes: Changes to activities, locations, turnover or business dependencies should be disclosed.

Selecting an Indemnity Period

The indemnity period should consider how long the business may need to repair or rebuild its premises, replace equipment, obtain approvals, restore supplies, replenish stock and return to normal trading levels.

The interruption may continue after physical repairs are complete. However, losses continuing beyond the selected maximum indemnity period are not normally covered.

Optional Extensions

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

These extensions are not automatically included. Each may have separate definitions, locations, sub-limits, waiting periods and exclusions.

Common Exclusions and Limitations

The policy commonly excludes or restricts:

1. Uninsured property damage: Interruptions caused by an event excluded under the associated property policy.
2. Closure without physical damage: Unless an applicable extension has been expressly included.
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 period expires.
5. Penalties: Fines, contractual penalties and liquidated damages.
6. Cyber incidents: Cyberattacks, malware, data loss and system disruption may require separate Cyber Insurance.

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. Document additional expenses incurred to reduce the interruption.
6. Retain invoices, contracts, repair reports and financial statements.

How to Request a Quotation

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

A quotation does not confirm that insurance has started. Cover 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 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 initial operational and financial details online.
3. Business-based assessment: Quotations can consider declared turnover, gross profit, expenses and the requested indemnity period.
4. Policy and claims enquiries: Customers can contact Al Buhaira Insurance regarding issued policy terms or an incident under an existing policy.

Frequently Asked Questions