The Fire Is Out. How Long Can the Business Stay Closed?

A repaired machine does not instantly bring customers, staff and suppliers back into rhythm. After serious property damage, revenue may fall while salaries, rent and finance costs continue.

Business interruption cover is meant to address eligible financial consequences of an insured disruption, but the chosen assumptions need to resemble the way the business would actually recover.

Estimate time, not only money

Ask how long it would take to investigate the loss, obtain approvals, replace imported equipment, rebuild, re-certify and regain customers. The indemnity period should be tested against a difficult recovery, not the fastest possible repair.

Bring finance and operations into the same room

The policy calculation needs financial data, while the recovery timeline lives with operations. A useful review combines both.

• Map single points of failure and dependent suppliers.
• Separate variable costs from expenses that continue during closure.
• Document seasonal sales and planned growth.
• Test alternatives such as temporary premises or outsourced production.

The practical takeaway

Do not stop the insurance conversation at the replacement cost of the building. Ask what happens to cash flow on day 30, day 90 and day 180.

Coverage, exclusions, limits and claim requirements vary by insurer and policy. Read the customer information sheet and policy wording before you buy or renew.