Businesses may incur losses due to the inability to use the business property or equipment. This may be as a result of damage to the property or equipment through a natural disaster, accident, or even breakdown of machinery. In an effort to ascertain compensation for this interruption of the business, the business must attain a Business Interruption or Consequential Loss policy.
The Business Interruption or Consequential Loss policy will compensate you for loss due to the interruption of your business by an unforeseen event such as Hurricane, Fire or breakdown of machinery.
Please note however that this policy is not sold in isolation but must be purchased with a Commercial All Risk or Fire & Allied Perils policy.
An example, is when a major storm causes extensive damage to the business property which requires closure of the business for refurbishment. The business will lose revenue while it is closed, fixed costs will still be incurred, but there’s no money coming in. These are consequential losses, and can be covered under business interruption insurance.