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CBI provides indemnification for lost profits and expenses resulting from interruption at the company’s customer or supplier. However, for the CBI coverage to be triggered, the cause of loss at the customer or supplier location must be of the type that the insured is covered for under its policy.
What we do key takeaways:
- Determine the company’s level of reliance on other businesses for normal operations.
- Request and review relevant books and records supporting the loss.
- Analyze projected performance versus actual performance pre-loss and post-loss.
- Prepare loss calculation.
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What is CBI Coverage?
Contingent Business Income (CBI) Coverage is a type of insurance that helps businesses manage the financial fallout when key suppliers, customers, or partners experience disruptions. Essentially, it covers lost profits and additional expenses that occur if a business you depend on can’t operate as usual. However, it’s important to note that to trigger CBI coverage, the cause of loss at your supplier or customer must be a covered cause of loss in your own policy.
How Does CBI Coverage Work?
Assessing Dependency
The first step in CBI coverage is understanding how much your business relies on a customer or supplier. This assessment helps determine the potential impact on your operations.
Documenting and Reviewing Financials
If a disruption occurs, we will request and review relevant financial documents that support the loss. This documentation typically includes books and records that outline your financial performance before and after the disruption.
Analyzing Business Performance
Compare your business’s projected to actual performance during the period of restoration. This analysis helps pinpoint the direct financial impact of the disruption on your business.
Calculating Losses
The final step involves calculating the total losses resulting from the interruption. This calculation will form the basis of your insurance claim.
Requirement for Coverage Activation
For CBI to apply, disruption to your supplier or customer must be of the same type that is covered in your commercial property insurance policy.
CBI insurance protects your business from the ripple effects caused by disruptions in your supply chain or customer base.
