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There are situations when businesses must pause due to physical or online property damage. Business interruption claims can financially destroy a company when there is no income but a list of expenditures.

According to the Allianz Risk Barometer, business interruption is predicted to be the second-highest business risk in 2023. Business interruption could happen to any firm in any industry. However, some industries are more prone to these disruption risks. The interruption can force a company to go bankrupt or insolvent as soon as it reopens due to a lack of funds.

Fortunately, businesses more likely to be affected by business disruption can purchase business interruption insurance. It is one of the top insurances needed, along with property all-risk and liability insurances. What are these industries?

The article will highlight the top industries affected by business interruption, with the greatest number of business interruption claims worldwide.

What Business Interruption Claims Are Covered by Insurance?

Business interruption claims are commonly due to fires, floods, natural disasters, and cyber-attacks. 

Business interruption insurance (business continuity insurance) is one of the best protections to deal with property interruption risks. Additionally, cyber insurance’s business interruption segment will cover cyber business interruptions. Each insurance covers and reimburses financial loss due to sudden long-term business disruption. 

Submitting a business interruption claim allows business owners to focus on rebuilding and resolving without financial damage. Furthermore, the insurance coverage will reimburse costs such as employee salaries, lost revenue, rent expenses, relocation costs & loan payments.

Either business (BI) interruption or cyber insurance is the ideal business continuity plan when things go wrong, and there is nothing a business owner can do about it.

Top Industries with High Business Interruption Claims

F&B Industry

The food and beverage industry is full of risks due to the flames, electrical equipment and countless pipes. The F&B industry is one of the top industries continuously submitting business interruption claims due to unpredictable fires and floods.

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The F&B industry includes restaurants, bars, cafes, food manufacturers and more. Any business involved in the sector could experience extreme property damage. The damage will result in the company shutting down for a few months to rebuild. During these months, the income pauses; unfortunately, the expenses don’t. The firm is still liable to pay rent, salaries and more.

For example, there have been restaurant fires in Hong Kong, where the fire was due to accidents in the kitchen. The business had to pause and rebuild or permanently shut down. The worse the property damage, the longer the repairs will take and the longer the business interruption. The F&B industry needs business interruption insurance to cover such claims and open with a fresh start.

Manufacturing Industry

The manufacturing or construction industry involves a range of complex machines and flammable chemical and electrical hazards. Therefore, business interruption claims are highly likely due to explosions, machine breakdowns and fires. These risks could occur for various reasons at any point in the business operation.

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These risks bring a saddening amount of damage and business stress. The property damage is followed by a business interruption for months to a year. Manufacturing industry business disruption can lead to substantial financial loss, and the closure would affect many third parties.

The industry must focus on getting the operations back as soon as possible, which will require more than building costs. After reopening a manufacturing company, they need materials, staff and more. These costs may be unaffordable without income protection for a year. The manufacturing industry’s interruptions will be covered by business interruption insurance.

Retail Industry

Retail businesses sell most of their products through physical stores. Most stores are near open roads to help promote and reach customers. However, retail stores are always at risk from natural disasters, along with internal floods and fires.

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For example, typhoon 10 Mangkhut in Hong Kong damaged 100s of stores. The fierce force of the wind shattered windows and flooded the store interiors. A weather disaster can cause a large number of damages and be one of the leading business interruption claims.

The retail industry is always at risk from these disruptions. Additionally, there is an increasing amount of natural disasters that could impact companies in the retail industry and their physical assets. 

Retail companies cannot work from home, and their online business may not be enough to generate sufficient income. These companies must wait months until all repairs and new product supplies are completed. They still need to pay rent, employee salaries, and possible loans during this time. Thankfully, retail company management can secure business interruption insurance to cover retail business interruption claims.

Technology Industry

The technology industry may not depend on their physical offices but are as likely to be affected by business interruption. Rather than property damage, the industry is affected by cyber-attacks. Cyber-attacks in the technology industry are one of the most common risks.

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A cyber-attack can affect and shut down the website, applications and system for 20 days or more. These days, a business can suffer a significant financial loss and bring in almost no income.

A technology company can include any business that provides services primarily online. Cyber-attacks are constantly increasing, and new AI (artificial intelligence) attacks are finding their way through cyber security. Any company that has an online presence can be a victim of a cyber-attack in 2023. Hence, cyber insurance has a section providing the same coverage as business interruption insurance for cyber attacks.

Business Interruption Claims That Are Not Covered by Insurance

Most of the above industry’s business interruption claims will be covered by insurance. However, some interruptions may not be covered by insurance.

One of the most common business interruption exclusions is pandemic interruptions. Millions of businesses paused during COVID-19, and the insurance did not cover their financial loss. There has been no coverage for this interruption in any insurance policy since 2020.

Business interruption insurance will also not cover any short or partial interruptions. Policies may differ, but most business interruption policies only cover interruptions after 72 hours. Hence, if a pipe leak is cleaned and solved within two days, insurance will not cover the financial loss for those 2/3 days.

Another exclusion of business interruption insurance is interruption due to a supplier or client. For example, the insurance will not cover the loss if your supplier pauses and disrupts your business activities. The BI insurance only covers direct and physical interruptions.

BI insurance will not cover cyber interruptions; companies must also purchase cyber insurance. Additionally, the cyber insurance business interruption sector will only cover cyber disruption.

Having the right policy can be the best business continuity management for most business interruption claims till reopening day.


To Learn More about business interruption insurance and cover business interruption claims in Hong Kong & Asia, contact Red Asia Insurance.