What is Contingent Business Interruption Insurance?
Contingent Business Interruption (CBI) insurance is a specialized type of business interruption insurance that protects companies from losses resulting from issues affecting their suppliers or customers. Unlike standard business interruption insurance, which covers losses due to a company's own operational halts, CBI insurance comes into play when third-party businesses, crucial to your operations, are unable to deliver goods or services due to unforeseen circumstances.
Common triggers for CBI coverage include natural disasters, fires, or any events that disrupt the operations of a key supplier or customer. For example, if your primary supplier experiences a flood that halts production, CBI insurance can help cover lost income and ongoing expenses that arise from the disruption.
This coverage is pivotal for businesses that rely heavily on specific vendors or clients, as it provides a safety net against potential income loss when external partners encounter difficulties. Therefore, evaluating the risks associated with your supply chain and customer relationships is crucial for determining whether CBI insurance is necessary for your business.
Overall, Contingent Business Interruption Insurance is an essential component of a comprehensive risk management strategy, ensuring business continuity even when external factors impact vital business relationships.