First published: 15/12/2020
Have you considered the potential impact to your charity should disaster strike?
What if there was a flood or a fire?
Or an opportunistic hacker finds a flaw in your security system?
If you haven’t assessed these risks already, then it’s probably time you did.
In this article we’ll explore what’s covered with business interruption insurance, and how it could rescue your organisation should disaster strike.
What is business interruption insurance?
Business interruption insurance (also known as ‘business continuity insurance’) provides cover for losses following an incident that interrupts or interferes with your normal business activities.
Business interruption insurance will usually be included as part of a robust charity insurance package, depending on your requirements.
However, it’s important to remember that business interruption insurance won’t necessarily cover all types of disruption, but will only protect against the risks specified on the policy.
For example, communicable diseases (i.e. pandemics) are a common exclusion of business continuity insurance policies.
What does business interruption insurance cover?
Although cover can vary, business interruption insurance will usually provide cover against losses following (and in consequence of) material damage to your property at an insured location.
This can help safeguard your organisation against the potential financial loses and additional cost that can occur if your ability to operate is affected by certain risks, such as a fire or flood.
Business interruption insurance could cover the following risks:
- Extreme weather events, such as flooding
- Cyber attacks
- Electrical failure or equipment breakdown
- Denial of access – for example, unexpected roadworks preventing customers or clients entering your premises
- Loss of customer attraction caused by events such as a bomb threats or physical damage in the near vicinity (usually within a specified distance)
- Utility failure – such as gas, electricity or water supplies
- Failure of telecommunications and internet service providers
- Death or criminal investigation of a trustee
What’s not covered with business interruption insurance?
There are some key risks that are usually not covered by business interruption insurance, so it’s important to familiarise yourself with the exclusions of your policy so you know where you stand. The following scenarios will usually not be covered:
- Communicable diseases (illnesses caused by viruses or bacteria spread through contact with contaminated surfaces, bodily fluids, blood products, insect bites, or air transmission) – i.e., pandemics
- Acts of terrorism (usually not including bomb threats)
- Cover is also usually not provided if your organisation’s activity have discontinued permanently or a liquidator is appointed.
Why does my organisation need business interruption insurance?
With a year as tumultuous as 2020, it’s never been more important to ensure you have considered emerging risks to your organisation.
While pandemics are usually not covered by business disruption insurance, the ways in which organisations have had to adapt this year could mean your current insurance and/or Business Continuity Plan is no longer fit for purpose.
For example, if you’ve moved your donation system online in lieu of face-to-face fundraising, you could be a more desirable target for hackers.
Ben Harris, charity account manager for Endsleigh, said “this year it has become clearer than ever the positive impact a robust Business Continuity Plan can have for an organisation – of which suitable business interruption insurance will form a huge part.
Considering the potential impact of increasingly common risks – such as cyber attacks at a time when more and more charities are fundraising online – making sure you have the right business interruption insurance in place could be the first step towards ensuring your organisation thrives under unprecedented circumstances.”
Protecting your charity against the unexpected
With over thirty years’ experience and over 3,000 not-for-profit customers in the UK, we work with market-leading insurers to provide competitive coverage, expert consultation and specialist advice for charities, community groups and not for profit organisations.
Stay up-to-date with the latest COVID-19 guidance by visiting the government website.