In March 2026, a major fire broke out at a vape shop near Glasgow Central Station. This fire affected a number of the surrounding businesses, many of which were temporarily unable to trade following the blaze.
If you were unable to trade after an unexpected event, would your business interruption insurance cover you?
In this post we’ll explain the three different types of business interruption insurance, and discuss how you can ensure you have all the cover you’d need to help you stay afloat should you ever need to make a claim.
For more information about how we can support your business, call us on 020 8290 9080 or email business@anthonyjones.com.
What is Business Interruption Insurance?
If an unexpected event such as a fire or a flood forces you to temporarily stop trading, business interruption insurance can cover all of your expenses during your downtime.
A good business interruption insurance policy should put your business back in the position it was in immediately before the unexpected event occurred. This means that your business interruption insurance policy should give you all the cover you need to ultimately continue trading as if nothing had happened.
You can read our full guide to what business interruption insurance covers.
The Three Types of Business Interruption Insurance
There are three main types of business interruption insurance:
- Gross profit
- Gross revenue
- Increased cost of working
Gross Profit Policies
A loss of gross profit business interruption insurance policy will cover your net profit loss following an insured event. This is the most common type of business interruption insurance policy.
Insurers calculate the sum insured through deducting your uninsured working expenses (UWEs) from your turnover. UWEs are variable costs, meaning that if your turnover decreases, so too will your working expenses. This largely extends to purchases, such as stocks for resale, raw materials, and other components.
Loss of gross profit business interruption insurance is best for businesses with multiple variable costs directly linked to their turnover. This might include retail businesses whose turnover relies on buying stock to sell, and manufacturing businesses who must keep themselves supplied with raw materials.
Gross Revenue Policies
A loss of gross revenue business insurance policy will cover your loss of turnover or income following an insured event. This type of business interruption insurance is best for businesses with fewer variable costs tied to turnover, but with more fixed costs. These are costs that must be paid regardless of whether your business is operating, such as rental costs and staff wages.
Gross revenue business interruption insurance is best suited for service-led businesses that might be able to continue operating in some form following a fire, flood, or another insured event. This might include solicitors, accountants, IT support, and so on.
Gross revenue business interruption insurance policies may include some cover for increased cost of working. But as we’ll outline below, businesses may also choose an increased cost of working only business interruption insurance policy.
Increased Cost of Working Policies
Businesses may choose an increased cost of working only business interruption insurance policy. This is a popular choice for businesses whose total income may not be affected by an insured event such as a fire or a flood.
The staff of an office-based business, for example, might temporarily switch to remote working practices following an incident at the business premises. The business may not directly lose any revenue as a result of this incident, but it may have to pay certain additional expenses to continue trading, such as temporary premises, new equipment, or additional staffing costs.
In this case, the business interruption insurance could cover these increased costs, even if it does not cover any loss of revenue or gross profit.
How To Get The Right Level of Business Interruption Insurance
Every business is different, and when it comes to business interruption insurance, it’s best to avoid generalising. Make too many assumptions and you could find you have less cover than you need in the event of a claim.
Work Out What Type of Business Interruption Insurance is Best For Your Business
- Gross Profit – Best for businesses with multiple variable costs – or UWEs – including manufacturing and retail businesses.
- Gross Revenue – Best for businesses with few variable costs, such as service-led businesses including IT consultants, solicitors, and accountants.
- Increased Cost of Working Only – Best for larger businesses and multinationals who may be less impacted by an incident at a single location, but who may need a cash injection to absorb the expenses of their continuity planning.
How to Calculate Your Sum Insured
Once you know what type of business interruption insurance you need, it’s time to calculate your sum insured.
For a gross profit policy, you will calculate this through deducting your UWEs from your turnover. For a gross revenue policy, your sum insured can simply be your total turnover for the total length of your indemnity period.
In any case, to avoid underinsurance, it’s best practice to set your sum insured as high as possible, as your recovery might take longer than you expect. Read our full guide to calculating your sum insured for your business interruption insurance.
How to Choose The Right Indemnity Period
With a business interruption insurance policy, maximum indemnity period is an estimate of the amount of time it would take your business to fully recover from the event.
It’s important to get this right, because your business will stop receiving claim payments once you reach the end of the indemnity period, even if you have not yet received your maximum sum insured.
At Anthony Jones, we think that all businesses should get a 24 month indemnity period as a bare minimum. Read our full guide to getting the indemnity period right.
Work With An Insurance Broker
Finally, to ensure you get the right level of business interruption insurance for you, it pays to work with an insurance broker.
Joe Penny, Associate Director at Anthony Jones says:
“Every business is completely different, and it’s particularly important that you get business interruption insurance that’s tailored to meet your unique cover requirements.
“At Anthony Jones, we’ll take the time to get to know your business inside and out. This way we’ll understand what type of business interruption insurance is right for you, and we can then advise you on the right sum insured and indemnity periods. We can then help you access the cover you need at a competitive price.”
For more information about how we can support your business, call us on 020 8290 9080 or email business@anthonyjones.com.
