What is contingent business interruption?

We have discussed Business Interruption in respect of direct damage to your property. It could be that one of your utilities such as water or electricity is affected and now your business is shut down because of this lack. There are extensions for Utilities and Power that can be purchased to cover this eventuality. This is more likely to be a short term interruption. What if your main supplier or customer has a major claim?

An example would be if you purchased supplies or goods from one particular company to resell and that particular company has had an explosion at their plant. Now their premises are destroyed and they cannot supply you with the goods you need. Will this put you out of business?

You have likely considered this situation and may have a plan in place to purchase from another supplier. You may have a reserve inventory to get you past the waiting period necessary while this company is rebuilding and getting their production back on line. What if neither of these solutions are available? You could find yourself out of business because you cannot get the supplies you need.

What if you are the supplier and your main customer has a major fire. This customer now will not be able to purchase your goods. Now what will you do?

The insurance answer is contingent business interruption. Contingent because the claim depends on the the loss happening somewhere other then your own premises. This coverage is very important to you if you depend on one supplier or one large customer. Talk to your agent or broker about what is available to protect your ongoing income.