At a manufacturing business the length of the standstill is set not by the contractor who rebuilds the hall, but by the delivery and commissioning time of your production line.
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In brief
The gross profit of a factory is turnover minus raw materials, packaging and energy that move with production. What runs on is the depreciation and financing on the machines, the permanent shifts, the maintenance contract and the rent or mortgage on the hall. That makes the sum insured high and the consequences of underinsurance large.
The distinguishing element is time. A production line built to order, an extruder or a packaging line has a delivery time of months, followed by installation, connection, commissioning and a trial run before quality is back to specification. For installations requiring a permit, a procedure comes on top of that.
In manufacturing, therefore, the indemnity period is the most important choice on the policy, and not the level of the sum. We put the full recovery path on paper before that period is fixed. The general structure of the cover is on our page about business interruption insurance.
What does business interruption insurance for manufacturing 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.
Delivery and commissioning time set the period
For a bespoke machine the clock starts with the order, not with the fire. Engineering, construction, transport, installation and connection come before the first trial run, and only after that do you reach the old reject rates and speeds again. If the indemnity period runs out while you are still commissioning, the payment stops too. Ask your machine supplier for a realistic lead time and record it when applying.
Machinery breakdown is a different peril from fire
A cracked shaft, a burnt-out motor or a fractured press tool is not fire, storm or water damage. Standard business interruption cover then pays nothing. Repair of the machine runs through machinery breakdown insurance; the interruption that follows only where machinery breakdown as a peril is insured on the business interruption policy. On a line with a single critical component that is often more important than a higher sum.
A single raw material supplier can stop you without any damage of your own
If you are single source on a raw material, a semi-finished product or a specific packaging, a fire at that supplier affects your production directly, while nothing of yours is damaged. The main cover then pays nothing. Only the supplier risk section absorbs this, usually with a named list of businesses and a limit of its own. The same applies to failure of the energy or water supply.
What is not included
Not covered are contractual penalties for late delivery, the costs of a product recall or of rejected production, wear and normal maintenance, and loss of turnover through falling demand or higher energy prices. Liability for damage caused by a defective product runs through Article 6:185 of the Dutch Civil Code and the liability insurance, not through this policy. Digital failure of your control system without material damage falls outside as well.
What does your premium depend on?
Delivery time for the critical machines. Bespoke installations with a long lead time call for a longer indemnity period and therefore raise the premium.
Redundancy in the production line. A second line or a fallback factory limits the standstill. A single line brings the whole turnover to a halt.
Nature of the production process. Working with naked flame, dust, solvents or plastics gives a higher fire load than cold assembly.
Machinery breakdown as an insured peril. Interruption after a technical defect is a separate extension and weighs heavily on capital-intensive lines.
Dependence on suppliers and utilities. Single sourcing and a single power or gas connection make additional sections necessary.
Prevention and compartmentation of the hall. Fire separation between production and storage, sprinklers and the maintenance regime determine acceptance and the rate.
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.
Why is the indemnity period so decisive in manufacturing?
Because the recovery path consists of more steps than building. After clearing up and rebuilding come ordering, delivery, installation and commissioning of the machines, and only then are you running to specification and at speed again. With bespoke installations that process often takes longer than the rebuilding itself. Too short a period leaves you carrying the most expensive final months.
Is interruption after machinery breakdown covered?
Only where machinery breakdown is expressly insured as a peril on the business interruption policy. As standard the cover attaches to fire, storm, water and burglary. A technical defect does not fall under those, even if it brings your production to a complete halt. Repair of the machine itself runs through machinery breakdown insurance, which you take out separately from this cover.
What if my raw material supplier fails?
Your production is then at a standstill without any material damage at your own premises, and the main cover pays nothing. This can be insured through the supplier risk section, where the suppliers concerned are usually named on the policy and a separate limit applies. For businesses that buy single source that is a necessary extension.
Does the policy pay for a product recall or rejected production?
No. Recall costs, rejected batches and claims from customers about product quality fall outside business interruption insurance. Liability for damage caused by a defective product is assessed under Article 6:185 of the Dutch Civil Code and belongs with liability insurance or separate recall insurance. This policy looks only at the gross profit you lose after covered material damage.
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.
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