Business interruption insurance for construction firms
A construction business earns its money on site, but comes to a stop the moment the store holding its plant, the joinery workshop or the prefab hall catches fire.
The calculator and the quote form below are in Dutch. Prefer to do this in English? Email info@finassverzekert. nl or call 072 - 509 24 56 and we will take it from there.
Work out for yourself what it would cost.
Enter your details; you will receive a proposal within one working day.
We compare the offerings of several insurers
An adviser checks whether the cover suits your activities
A premium indication, not personal advice. Prefer to talk it through? Call 072 - 509 24 56.
In brief
Business interruption insurance pays for the loss of gross profit after covered material damage has brought your business to a standstill. For a contractor or installer that damage is rarely in the office and almost always in the store: tools, scaffolding, crane and formwork equipment, the sawing line or the stock of prefabricated elements.
What runs on is mainly wages. Permanent staff, working site managers and lease instalments on company vans continue to be paid while there is no production. What falls away is the purchase of materials and subcontracting. That makes the gross profit at a construction business higher than owners themselves estimate, with underinsurance as a result.
The dividing line with the works themselves matters. Damage to the works under construction belongs on Construction all risks (CAR) insurance; delay in completion and contractual penalties do not fall under this policy. Often additional costs insurance is more appropriate here, because you can keep going with hired plant.
What does business interruption insurance for construction businesses cover?
The structure of the cover in three parts, with an overview per situation below.
The basis
Gross profit
Turnover minus the variable costs that move with it.
Fixed costs continue
Profit margin you lose
Update annually
The term
Indemnity period
Calculate back from full turnover, not from the rebuild value.
Clearance and permits
Rebuilding and fitting out
Winning customers back
Additional costs
Alternative
The additional costs of not standing still.
Temporary location
Outsourcing to third parties
Often cheaper
What is covered
Situation
Business interruption
Additional costs
Downtime after a fire at your premises
Yes
Yes
Loss of turnover after water damage
Yes
Yes
Additional costs to keep going elsewhere
No
Yes
Failure of a supplier
Sometimes
Sometimes
Digital downtime without physical damage
No
No
Loss of turnover due to lower demand
No
No
This overview is general in nature and is not personal advice. What is actually covered, including exclusions, limits and the excess, is set out in the policy conditions and the insurance card (verzekeringskaart) of the insurer; you receive both before you take out cover. Taking out cover without advice? Then read what execution only means for you.
Where things go wrong in practice
Four points that make the difference between a policy that pays out and one that does not.
Hired plant often makes additional costs cover more suitable than gross profit cover
If your plant store burns down, work on site does not necessarily stop: cranes, generators, scaffolding and tools can be hired. You then lose no turnover but you incur additional costs. A business interruption policy pays those additional costs only within the mitigation or additional costs section and up to a limited amount. Separate additional costs insurance fits that better and is generally priced lower than full gross profit cover.
Penalties and delay costs on the project are excluded
If the fire puts you behind schedule, your client claims a reduction or a penalty for each week of overrun under the specification or the UAV conditions. That contractual obligation is not insured business interruption and is not paid. The consequential loss your client suffers also stays outside this policy. Liability for damage to the works or to third parties runs through the construction all risks (CAR) insurance and the liability insurance, each with its own limit.
Declare the full wage bill, including working management
At a construction business the wage bill is the largest fixed cost. If only office staff are declared and not the site staff you continue to pay during a standstill, the sum insured is too low and the proportionality rule is applied when a loss occurs. The pay of working directors and of permanent hired-in staff also belongs in the declaration, unless you can scale it back weekly under contract. We test that against your latest annual accounts.
What is not included
A standstill through frost delay, a suspended permit, a nitrogen ruling or a client going bankrupt is not the result of material damage and is therefore not covered. Theft of plant from a site rarely leads to payment under this policy, because the cover attaches to the insured location. Digital interruption falls outside the cover as well; for that cyber insurance needed.
What does your premium depend on?
Level of the wage bill. At a construction business, continuing wages make up the largest part of the insured gross profit.
Nature of the work. Joinery, roofing with naked flame and metalworking in the store weigh more heavily than assembly and finishing.
Value and source of the plant. Plant that can be hired straight away shortens the standstill; specialist machines with a delivery time lengthen it.
Indemnity period chosen. For a contractor a shorter period is often enough than for a manufacturing business, provided hired plant is available.
Security and storage at the store. Separate storage of flammable materials, gas bottles and batteries affects the likelihood of fire and therefore the premium.
Balance between own staff and subcontracting. If you work mainly with subcontractors, a larger part of your costs falls away by itself during a standstill.
Insurers weigh these details differently. That is where your saving is.
How we arrange it
You request a quoteWe take stock of your activities, turnover and wishes.
We compareseveral insurers, on premium as well as conditions.
You receive a proposalWith an explanation of the differences and the exclusions.
We arrange the switchIncluding cancellation, so there is no gap in cover.
Customers rate our service on four aspects: personal service, service delivery, availability and the outcome. The reviews are collected and published by NH1816 and come from customers who have actually taken out a policy with Finass Advies B.V. or reported a claim.
Yes, as a fixed cost within the gross profit, but only to the extent that you have declared that wage bill. If you continue to pay site managers and carpenters during a standstill, that pay belongs in the sum insured. If it is missing from the declaration, the sum is too low and the payment is reduced proportionately. Declare the wage bill from the annual accounts, not an estimate.
Does the policy cover the penalty for late completion?
No. A penalty or reduction scheme you have agreed with your client is a contractual obligation, not insured interruption loss. The costs your client incurs through the delay also fall outside. What the policy pays is your own lost gross profit in the period in which the material damage leaves you with less turnover.
What is the difference from construction all risks (CAR) insurance?
Construction all risks (CAR) insurance covers damage to the works under construction, to ancillary plant and to existing property on the site. Business interruption insurance covers no construction object at all, but the loss of turnover of your business after your own premises or contents have been damaged. They are complementary policies, attaching to different locations and different interests.
Would additional costs insurance suit me better?
For many contractors, yes. As long as you can keep working with hired plant and a temporary storage location, you lose hardly any turnover but you do incur additional costs. Additional costs insurance pays precisely those costs and is usually cheaper than full gross profit cover. With your own production hall or prefab line that does not hold; then business interruption cover is indeed needed.
Finass Verzekert is a trading name of Finass Advies B.V. We advise on and arrange non-life insurance on the basis of an objective analysis of several insurers, and receive commission for this from the insurer, which is included in the premium. You pay no separate advice fee. Before you take out cover, we establish your wishes and needs.
You will find our licence, KvK and Kifid details and our complaints procedure at the foot of every page.
