Business Interruption Insurance Ireland: What It Covers and How to Set Your Sum Insured

What is business interruption insurance in Ireland?

Business interruption insurance covers the income your business loses while it cannot trade normally after insured damage to your property. The property section of your policy pays to rebuild the premises and replace the stock. Business interruption pays for what happens next: the turnover you did not earn, the wages and rent that still fall due, and the extra costs of getting trading again.

It is the cover Irish business owners most often leave out, and the one they most often wish they had bought. A fire is survivable if the building is reinstated in six months. It is a great deal harder to survive six months with no income while the rent, the loan repayments and the payroll all keep running.

Why does business interruption cover matter so much?

Most commercial claims are not really about bricks. A retailer whose shop is gutted by fire loses far more in lost trade over the following year than in shelving and fittings. A food producer whose chiller fails loses the stock once, then loses customers for as long as it takes to restart supply.

Property cover restores the asset. Business interruption restores the business. For the wider picture of how the pieces fit together, our guide to business insurance in Ireland sets out the core covers most firms build around.

What does a business interruption policy actually pay for?

The heart of the cover is loss of gross profit, which in insurance terms is not the accounting figure you might expect. It is broadly your turnover less the costs that stop when trading stops, such as purchases of stock and raw materials. The costs that carry on regardless, including salaries, rent, rates, insurance and loan interest, sit inside the sum insured and are what the policy protects.

Most Irish policies also pay increased cost of working: the reasonable extra money you spend to limit the loss. Renting a temporary unit, hiring in replacement plant, paying overtime or couriering stock from a second site can all qualify where the spend genuinely reduces the claim.

Typically covered	Typically not covered
Loss of gross profit while trading is reduced or suspended	Losses with no insured physical damage behind them
Continuing fixed costs such as rent, rates and salaries	Ordinary trading downturns, lost contracts or bad debts
Increased cost of working to keep trading	Deliberate acts, wear and tear and poor maintenance
Professional fees for preparing the claim, where the extension is bought	Fines, penalties and consequential losses excluded by the wording
Damage at a named supplier or customer, if that extension is added	Unnamed suppliers, unless the policy specifically says otherwise
Loss of access caused by damage at neighbouring property, where extended	Infectious disease and closure by authority, unless expressly written in

What is the indemnity period and how long should yours be?

The indemnity period is the maximum length of time the policy will keep paying after the damage. It is the single most important number in the section and the one most commonly set too low.

Twelve months is the default on many Irish policies, and for a lot of businesses twelve months is not enough. The clock does not start when the building reopens. It runs from the date of the damage, and it has to absorb everything in between: making the site safe, agreeing the claim, drawing plans, obtaining planning permission if the rebuild changes anything, waiting for a contractor, fitting out, restocking, and then winning customers back to where they were.

Manufacturers with specialist plant on long lead times, food businesses needing fresh approval, and any business in a listed or awkward building should be thinking well beyond twelve months. Twenty four or thirty six months is common for firms where recovery is slow. The extra premium for a longer indemnity period is usually modest compared with the exposure it removes.

How do you work out the sum insured?

Underinsurance is the great quiet risk in Irish commercial cover, and business interruption is where it bites hardest. Where the sum insured is materially below the true figure, average may apply and the settlement can be reduced in proportion, even on a partial loss.

A workable approach looks like this. Start with your projected gross profit for the coming year rather than last year’s audited figure, because the policy responds to the future you lost, not the past you had. Then scale that figure to match the indemnity period you have chosen. If your indemnity period is twenty four months, the sum insured needs to reflect two years of gross profit, not one. Finally, allow for growth, inflation and any expansion already planned, and review the number at every renewal rather than rolling it forward untouched.

Your accountant is the right person to confirm the underlying figures. A broker is the right person to translate them into the correct policy definition, because insurers do not all define gross profit identically.

What is the material damage proviso?

This is the clause that catches people out. Most business interruption sections only respond if there has been physical damage that is itself insured and, in practice, that a claim under the property section has been admitted or would have been admitted but for the excess.

In plain terms: if the property cover fails, the business interruption cover usually fails with it. That is why an unreported alteration to the premises, an expired alarm certificate or a lapsed condition on the property section can quietly disable the income cover as well. It is also why cover for events with no physical damage behind them, such as a utility failure at source or a cyber incident, has to be added deliberately rather than assumed.

What is not covered?

Business interruption is triggered by insured damage, so a general fall in trade, the loss of a major contract or a customer who does not pay are not claims. Damage that the property section excludes will not generate an income claim either.

Extensions matter here more than in most classes. Denial of access, damage at a named supplier or customer and loss of utilities can all be bought where the exposure is real. A business heavily dependent on one supplier or one landlord should be having that conversation at placement rather than at claim.

How much does business interruption insurance cost in Ireland?

There is no standard price, and any figure quoted without seeing the business would be a guess. The premium is driven by your trade, your gross profit sum insured, the indemnity period you select, the construction and protection of the premises, your claims history and how concentrated your risk is across sites and suppliers.

In practice, business interruption is usually written as a section of a combined commercial policy alongside property and public liability insurance, so it is priced as part of the package rather than as a standalone line. Two similar looking quotations can differ sharply once you compare indemnity periods and definitions, which is where reading past the headline figure pays.

The bottom line

Business interruption insurance protects your income, not your building, and it is the cover that decides whether a serious property loss becomes an inconvenience or an ending. Get three things right and the rest tends to follow. Set an indemnity period that reflects how long your business would realistically take to recover, not the default on the schedule. Calculate the sum insured on projected gross profit across that full period. Check which extensions your exposure actually needs, particularly around suppliers, access and utilities.

Review all three every year. A sum insured that was right when it was set becomes wrong quietly, and you only find out at the worst possible moment.

Frequently asked questions

Is business interruption insurance compulsory in Ireland?

No. Unlike motor insurance, there is no legal requirement to carry it. It is often required in practice by lenders, landlords and larger customers as a contract condition, so check your loan documents and lease before assuming it is optional.

Can I buy business interruption cover on its own?

It is normally written as a section of a commercial combined or property policy rather than sold separately, because it depends on the property cover sitting underneath it. If you have property cover in place already, the interruption section can usually be added or increased at renewal.

Does it cover loss of income from a pandemic or a forced closure?

Standard wordings respond to physical damage, so closures with no damage behind them are generally outside the cover. Some policies carry specific infectious disease or notifiable disease extensions, but these vary a great deal between insurers and many were tightened after 2020. Read your own schedule rather than relying on what a policy used to say.

What is the difference between gross profit for insurance and gross profit in my accounts?

They are rarely the same figure. The insurance definition works from turnover less specified variable costs, and it deliberately keeps fixed costs such as wages and rent inside the protected amount. Using the accounting figure straight off the profit and loss account is one of the most common causes of underinsurance.

How long does a business interruption claim take to settle?

Longer than most owners expect, because the loss keeps developing while the business recovers. Interim payments are common and worth asking for early. Good trading records, up to date management accounts and prompt notification all shorten the process considerably.

Should I insure for twelve months or longer?

Ask yourself honestly how long it would take to be trading at the level you were at before, allowing for planning, contractors, plant lead times and winning customers back. If that answer is more than a year, twelve months is the wrong number. Many Irish firms are better served by twenty four or thirty six months.

Talk it through with Breeze Insurance

Business interruption is not a box to tick on a schedule. It needs someone to look at how your business actually earns, how long it would take to recover and where the single points of failure sit. As an Irish insurance broker working with a panel of leading Irish insurers, we can review what you have, tell you plainly if it is already right, and go to the market on your behalf if it is not.

Give us a call on 0818 700 300 or request a quote at breezeinsurance.ie/free-quote and we will take it from there.

Breeze Insurance Ltd. is regulated by the Central Bank of Ireland. Registered in the Republic of Ireland with registration number 109879 and registered address at 38/39 Fitzwilliam Square, Dublin 2, D02 NX53. Director: Colin Long.