Dependence · reconstruction · recovery time
Business interruption insurance through Nationale-Nederlanden
Most businesses are brought to a standstill not by a fire of their own, but because someone else in the chain is at a standstill. Those two situations are treated very differently on a business interruption policy.
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A premium indication, not personal advice. Prefer to talk it through? Call 072 - 509 24 56.
In brief
Finass acts as an intermediary for Nationale-Nederlanden's business range and compares it objectively with more than thirty other companies; which insurer it becomes follows from what you need and not from a preference. Business interruption insurance fills the gap between the moment your business comes to a standstill through a covered cause and the moment turnover is running again. The property policy restores the assets, this policy keeps the business going. For the structure in outline we refer you to the business interruption hub page.
The part most often missing is contingent business interruption cover, also known as contingent business interruption cover. As standard the policy applies only to damage at your own location. If the factory of your only supplier burns down, or your largest customer is at a standstill for six months, nothing of yours has been damaged and no payment follows. Anyone who depends on one supplier, one machine or one sales channel must have those names put expressly on the policy schedule.
Do not underestimate the reconstruction costs either. After a fire not only the contents are gone, but also the paper and digital records at the location: order forms, drawings, calculations, client files. Building those up again takes weeks and is paid only where a section for it is insured. The same applies to the fee of the accountant who has to substantiate the size of the loss. For interruption through a digital incident without physical damage, cyber insurance the appropriate policy.
This page deals with one situation. The full overview is on Compare business interruption insurance.
What to look out for
Four subjects that are more often decisive in a standstill than the premium.
Dependence has to be arranged with names in full
A contingent business interruption cover usually works only for named locations of third parties, and up to a separate limit. If you change your main supplier or add a second production site, that has to be amended. Without that notification the extension is there, but not for the business that actually brings you to a halt.
Recovery time is almost always underestimated
Work from the date of the loss: clearing up, the insurance assessment, the permit procedure, tendering, building time, delivery time for machines, commissioning and winning customers back. For manufacturing businesses with specialist equipment a period of more than a year is no luxury. See also business interruption cover for manufacturing businesses.
What is structurally outside the cover
Excluded are, among others government measures and withdrawal of licences, fines and contractual reductions that your customer imposes on you for late delivery, and loss of turnover through market developments or the departure of staff. Damage caused by intent or wilful recklessness is also excluded; Article 7:952 of the Dutch Civil Code is the statutory basis for that.
Underinsurance and the annual review
The gross profit insured is a snapshot. If you grow by a quarter and do not adjust the sum, the payment is reduced proportionately when a loss occurs. Some policies have a margin of a fixed percentage above the sum declared; check whether there is one and how large it is, and report increases during the term at once.
What does your premium depend on?
- Gross profit insured per year: the basis of calculation for the policy
- Indemnity period: the longer, the higher the premium
- Dependence on third parties: insured locations of suppliers and customers
- Spread across locations: two sites lower the interruption risk
- Fire safety of the premises: compartmentation, detection and extinguishing
- Waiting period: an excess in days lowers the premium
Insurers weigh these details differently. That is where your saving is.
What is covered
| Situation | Basic | Extended |
|---|---|---|
| A fire in your warehouse brings production to a halt for three months | Yes | Yes |
| A burst pipe in the premises above you makes your office unusable for two weeks | Yes | Yes |
| Your only production machine fails through a broken gearbox | No | Provided that |
| The fire service seals off your premises after a fire next door, while nothing of yours is damaged | No | Provided that |
| The street in front of your shop is closed for a month for sewer work and the turnover falls away | No | Provided that |
| Your largest customer goes bankrupt and takes half your turnover with it | No | No |
Business interruption cover only takes effect after a covered material cause; falling demand is not an insured event.
Frequently asked questions
This is what people ask us most.
My supplier burned down and I am at a standstill. Is that covered?
Only with contingent business interruption cover in which that supplier is included. The main cover requires material damage at your own location, and there is none. This extension usually has a limit of its own and a shorter indemnity period than the main cover. Anyone heavily dependent on one supplier would do well to spread that dependence commercially as well.
Will my staff's salaries continue to be paid?
Wage costs that run on during the standstill are included in the gross profit insured and are paid with it. If you choose to keep salaries outside the sum as variable costs, the premium is lower but you carry the risk yourself. Discuss that with your bookkeeper in advance, because it cannot be corrected afterwards.
How is the size of the loss assessed?
A loss adjuster compares the actual results during the standstill with the result you would have achieved without the damage, corrected for trend and season. Your records are the evidence. Make sure back-ups are kept off the premises and report the loss in good time; Article 7:941 of the Dutch Civil Code requires you to notify and to co-operate.
What if I do not restart after the damage?
If you decide to wind the business up, the insurer will in principle not pay for the full indemnity period but for the period and the costs reasonably connected with the wind-down. The policy is an indemnity insurance, not a payment on ceasing to trade; Article 7:960 of the Dutch Civil Code prohibits you from ending up better off than you would have been without the damage.
Read more
Within Bedrijfsschadeverzekering
- Bedrijfsschadeverzekeringthe main page
- Klaverblad zakelijk bedrijfsschadeverzekering
- Business interruption insurance through a.s.r.
- Chubb zakelijk bedrijfsschadeverzekering middelgrote tot grote bedrijven
- Nationale nederlanden zakelijk extra kosten verzekering exploitatiekostenverzekering
- De goudse zakelijk bedrijfsschadeverzekering
- Compare business interruption insurance
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