At a logistics provider the risk lies in the hub: if your distribution centre goes out of action, the flow of goods for all your clients stalls at the same time.
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A premium indication, not personal advice. Prefer to talk it through? Call 072 - 509 24 56.
In brief
A logistics provider stores, picks orders and ships for third parties. Your turnover comes from throughput and volumes handled, not from journeys. In that respect this page differs from the business interruption insurance for transport firms, where the fleet is the bottleneck. If your warehouse burns down, not only your own processes stop but also the deliveries your clients have placed with you.
The business interruption insurance pays only your own lost gross profit after covered material damage to your premises, racking or installations. The stock of your customers that is lost with it does not fall under it: that is the owner's loss of goods and, in so far as you are held liable for it as a bailee, a liability matter.
In logistics, watch three boundaries in particular: contractual penalties under your service agreements are not covered, nor is failure of your warehouse system without material damage, and the indemnity period must be long enough to bridge the permit and inspection process after rebuilding as well.
What does business interruption insurance for logistics 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.
Your clients' goods are not your business interruption loss
In a distribution centre almost everything that can burn belongs to someone else. If that stock is lost, it is the owner's loss and not your lost gross profit. As a bailee you can be held liable for it. That claim runs through your liability cover and the storage conditions you apply, not through this policy. Insure third-party goods separately and record in the contract who bears which part.
Permits and inspection determine how long you are at a standstill
A burnt-out warehouse is not out of action for the building time alone. High-bay racking, a sprinkler installation and storage of hazardous substances call for a new environmental permit and an inspection before you may run volume again. So choose the indemnity period on the moment your throughput is back up to level and not on the handover of the building. A period set too short against that leaves the last part with you.
Penalties under your service agreements and lost contracts
Logistics contracts contain agreements on delivery reliability, with a penalty or reduction if you do not meet them. Such penalties are a contractual obligation and not covered business interruption loss; the policy works with lost gross profit. If a client terminates after the interruption, the insurer pays for the recovery of turnover within the period, but not for the structural loss of that contract. So limit your exposure to penalties in the agreement itself.
Sorting installation, warehouse system and scanners
An order flow stops more often through technology than through fire. If your sorting installation or conveyor belt fails mechanically, machinery breakdown is the source. Only where that damage is covered through machinery breakdown insurancedoes the resulting standstill fall to this cover. If your warehouse system is down through ransomware or a failure at your hosting provider, the material damage is missing and the policy pays nothing. For that cyber insurance needed.
What does your premium depend on?
Gross profit from your warehousing and handling activities. Turnover minus the costs that move with throughput. This is the basis of calculation.
Nature of the goods stored. Chilled and frozen storage, batteries and hazardous substances raise both the fire risk and the recovery time.
Number of locations and spread of volume. If you can move orders to a second centre, dependence on one building weighs less heavily.
Fire prevention in the warehouse. Sprinklers, compartmentation, storage height and the separation between loading dock and storage are all taken into account.
Indemnity period including the permit process. The period must cover rebuilding, inspection and building throughput up again.
Excess in days and dependencies insured. A longer waiting period lowers the premium; insuring interruption at regular clients or suppliers raises it.
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.
No. This policy pays only your own lost gross profit after covered material damage. You insure third-party stock through goods or storage insurance, and the liability you carry as a bailee through your liability insurance. Check that the storage conditions you apply match what those policies actually cover.
We have two distribution centres. Does that lower my risk?
Usually yes. If you can move volume to the second location, turnover stays largely intact and your loss consists mainly of additional costs: overtime, extra shuttle runs and temporary rent. Those additional costs are covered by additional costs insurance. Declare the spread when applying, because insurers weigh dependence on one location heavily.
Do penalties under our service agreements fall under the cover?
No. Contractual penalties, reductions and damages payable to clients are not lost gross profit and stay outside the cover. The same applies to the cost of repairing your reputation and to a contract terminated after the interruption. What does count is the turnover you lose within the indemnity period through the material damage itself.
Do I have to report that we are taking on a new storage category?
Yes. A change in the nature of the goods stored materially alters the fire risk. At inception the duty of disclosure under Article 7:928 of the Dutch Civil Code applies. If relevant information is missing, the insurer can rely on Article 7:930 DCC and reduce or refuse payment. So report new storage categories, cold stores or battery storage in advance.
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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