How to choose · Business insurance
How to choose property and business interruption cover
Last updated 25 October 2026 · 3 sources listed · Reading time about 3 minutes
Short answer
Property cover pays to repair or replace buildings, stock and equipment after insured events like fire or storm. Business interruption cover pays for lost income and ongoing costs while you cannot trade after such an event. The decisions that matter are the basis of valuation, the insured perils, the indemnity period for interruption, dependency on suppliers or customers, and any conditions on security and maintenance.
Who this is for: A business owner with premises, stock or equipment who wants to understand how to set sums insured and what interruption cover really pays.
What to evaluate
Valuation basis
Reinstatement cost and market value produce very different payouts for equipment and premises.
How to check: Check whether assets are insured for replacement or depreciated value and who sets the sums.
Named perils versus all risks
Named perils list events covered, while all-risks start broad and list exclusions.
How to check: Read the list of perils or exclusions and compare with realistic hazards.
Indemnity period
If recovery takes longer than the period, income cover ends before trading resumes.
How to check: Estimate how long rebuilding, re-equipping and regaining customers might take.
Basis of interruption cover
Gross profit and gross revenue wordings differ in what costs are included.
How to check: Ask how the insurer defines the measure of loss.
Dependencies
Loss at a key supplier, utility or customer may not trigger cover unless extended.
How to check: Ask about supplier, customer and utility extensions and any limits.
Conditions and warranties
Alarms, locks, fire protection and stock storage rules can affect payment.
How to check: List conditions and confirm they are being followed.
Comparison
| Cover | Pays for | Watch out for |
|---|---|---|
| Buildings | Repair or rebuild of the structure | Underinsurance and valuation basis |
| Stock and equipment | Replacement of insured items | Sum insured set below true replacement cost |
| Business interruption | Lost profit and ongoing costs after insured damage | Indemnity period shorter than real recovery |
| Dependency extension | Loss triggered by damage at suppliers or customers | Named premises only, and sub-limits |
Decision worksheet
Rate up to three options against this guide’s own criteria. It runs in your browser and saves only on this device. It is a thinking aid, not a recommendation.
1. Have you checked each criterion?
0 of 6 criteria checked.
2. Compare options (0 = fails or unknown, 3 = meets it well)
| Criterion | |||
|---|---|---|---|
| Valuation basis | |||
| Named perils versus all risks | |||
| Indemnity period | |||
| Basis of interruption cover | |||
| Dependencies | |||
| Conditions and warranties | |||
| Total (max 18) | 0 | 0 | 0 |
Questions to ask before you commit
- How are buildings, equipment and stock valued for a claim?
- Is cover on a named-perils or all-risks basis?
- What indemnity period is offered, and can I extend it?
- How is gross profit defined in the policy?
- Are suppliers, customers and utilities covered, and with what limits?
- What security and maintenance conditions apply?
- Does the policy pay for additional costs such as temporary premises?
Typical trade-offs
Longer indemnity period
- Upside
- Protects income through slow rebuilds and customer return.
- Downside
- Raises the charge and may require evidence of longer recovery.
All-risks wording
- Upside
- Wider protection with fewer gaps.
- Downside
- Higher cost and many exclusions to review.
Lower sums insured
- Upside
- Reduces cost in the short term.
- Downside
- Risks proportionate reduction of payments after a loss.
Common mistakes
- Setting an indemnity period based on the time to repair a building, ignoring equipment lead times and customer return.
- Insuring stock at cost when peak season value is higher.
- Neglecting supplier dependency, then discovering the loss falls outside cover.
- Letting security conditions lapse, giving the insurer a reason to reduce payment.
- Not updating sums after expansion.
Related questions
What does business interruption actually pay?
It generally pays the loss of gross profit and necessary continuing costs, such as wages and rent, during the period you cannot trade because of insured damage. It does not respond to a loss with no physical damage unless extended. The policy wording defines the measure and the period, so the definition decides the payout.
Why can a policy pay less than the loss after a fire?
Common reasons include underinsurance, where the sums insured are lower than true rebuild or replacement value, depreciation deductions on indemnity valuations, exclusions applied to the cause of the fire, and limits on individual sub-sections such as stock or tenant improvements. Review sums regularly and ask the insurer to explain in writing how settlement is calculated.
Is loss caused by a supplier shutting down covered?
Only if the policy includes a supplier or dependency extension and the cause is an insured event at the named supplier. General cover rarely extends to third parties. Ask for the extension and note any named-premises or territory limits.
How often should I review sums insured?
At least once a year, and whenever there are significant changes such as new equipment, an extension, a change of use or growth in stock levels. Construction and equipment costs also move over time, so periodic revaluation helps avoid shortfalls. Keep the records behind each valuation so they can support a claim if one is needed.
Sources and further reading
These pages were reachable when we last checked. They informed definitions and rules referred to above; they do not endorse this guide. Where rules differ by country, check the authority for your location.
- Insurance Information Institute — Insurance Information Institute, retrieved 27 October 2026
- Information for consumers — Financial Conduct Authority, retrieved 27 October 2026
- Health and Safety Executive — Health and Safety Executive, retrieved 27 October 2026
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