Contingent Business Interruption in Cyber Insurance

Contingent Business Interruption is used by many businesses to protect their income should their computer systems and service providers be interrupted by cyber failures or attacks. It is often overlooked by many organisations, but it could save you a huge amount of money and stress should your business be targeted. 

What is cyber contingent business interruption?

Cyber Contingent Business Interruption (CBI) is a type of coverage that compensates businesses for losses they may experience as a partial or complete interruption of computer systems due to cybersecurity failures of the service providers. It’s worth noting that not all cyber policies include CBI.  

The purpose of CBI is to soften the blow of the losses suffered when a business cannot operate due to a loss. Despite this, CBI is not always included in a cyber insurance policy

This coverage may apply to a number of situations, including:

  • A ransomware attack 
  • Your SaaS provider is shut down by an attacker
  • A denial of service attack shuts your website down

What does contingent business interruption insurance cover?

Most contingent business interruption insurance will cover the following items:

  • Profits – Based on your businesses profits from months prior to the cyber security fail or attack, a policy will provide reimbursement for the profits that would have been earned had the events not occurred.
  • Fixed costs – These can include operating expenses and other costs incurred through the business.
  • Temporary location – Some policies will cover the costs involved with moving and operating your business out of a temporary location.
  • Commission and training costs – In the event of a business interruption, companies will often need to replace machinery and retrain staff on how to use the new pieces of equipment.
  • Employee wages – Coverage of wages is essential if a business does not want to lose employees. This coverage can help business owners make payroll when they cannot operate.

Loan payments – Loan payments are often due monthly. CBI can help businesses repay their loans even when they are not generating income.

Why contingent business interruption insurance is essential for businesses

In a time in which businesses are increasingly reliant on technology, contingent business interruption coverage protects businesses from interruptions caused by cyber threats and attacks. These attacks can cause a huge amount of downtime, resulting in not only a loss of profits but potentially a loss in employees too. 

No matter whether your business is home-based or you work in a busy office environment, if your organisation needs to shut because of an insured loss, CBI helps to cover your ongoing expenses. 

Which businesses need contingent business interruption cover?

The risk of cyber attacks is nearly universal, but the amount of risk is slightly skewed across different industries. 

Any business which is highly dependent on technology, such as those in the healthcare, education, consulting and accounting industries, are more likely to be susceptible to outages and interruptions. Industries like law, real estate and construction face a slightly lower risk of outages, however, risk is still something that should be considered by each business. 

In general, any business that heavily relies on IT and in-house technology should seriously consider having CBI cover. 

Are there any limitations of contingent business interruption insurance?

Limitations can vary depending on the specific type of contingent business interruption insurance you choose and how it is structured. 

Some policies will identify specific services that count under the coverage, such as specific types of IT providers that may be excluded. Other policies may also exclude specific infrastructure, which refers to basic services like internet providers.
There may also be questions about triggers. For example, if there was a system and security failure caused by human error. Business interruption will usually cover security failures, however, system failures that are not triggered by an attack are not as common and may be sub-limited when given.