Contingent Business Interruption (CBI)
CBI cover insures interruption losses triggered by physical damage at third parties – in particular suppliers, customers or utility providers.
Comparison profile
- Trigger
- Occurrence
- Insured interest
- The insured's loss of gross profit and continuing costs arising from physical damage at a named or unnamed third party (supplier, customer, or utility) rather than at the insured's own premises.
- Rating basis
- Number and criticality of named suppliers/customers, Supply chain concentration and single-source dependency, Sublimit structure (named vs unnamed), Underlying BI sum insured and indemnity period
- Typical limits
- Sublimits per named third party, or blanket sublimits for unnamed exposures, typically well below the primary BI sum insured.
- Typical deductibles
- Time deductible aligned with the underlying business interruption policy's waiting period.
- Target segments
- Industry, Multinational programmes, Automotive and technology supply chains
Insured events
- Fire and explosion at a supplier or customer site
- Natural hazard damage at a third-party location
- Denial of access to a supplier or customer premises
- Utility service interruption (power, gas, water, telecoms)
- Machinery breakdown at a key supplier (if extended)
Key exclusions
- Third-party losses caused by perils not covered at that location
- Financial or insolvency-driven supply failures
- Losses at unnamed suppliers beyond the blanket sublimit
- War and nuclear energy
- Pandemic and infectious disease (unless specifically extended)
Coverage principle
The insured’s own operations are undamaged – but physical damage at a supplier, customer or utility interrupts the value chain. CBI covers the resulting loss of earnings, usually with sublimits and restricted to perils covered at the third party’s location.
Variants
Named suppliers/customers (higher limits, in return for disclosure and assessment) versus unnamed cover (low blanket sublimits). Extensions include deeper-tier suppliers (tier 2+), utilities (power, gas, water, telecoms) and denial of access.
Practical note
Globalised, concentrated supply chains (semiconductors, pharmaceutical active ingredients) often make CBI limits the bottleneck. Robust supply chain mapping is a prerequisite for meaningful limit setting and is increasingly demanded by insurers.
Comparison and delineation
CBI is an extension of, not a substitute for, business interruption cover: it responds when the interruption-causing physical damage occurs at a supplier, customer, or utility rather than at the insured’s own location. Because the insurer’s exposure depends on a third party’s risk quality, which is harder to assess directly, capacity is usually granted in narrower sublimits than the primary BI sum insured, and named-supplier extensions require disclosure of the supply chain. Even where the affected third party carries its own property or business interruption insurance, CBI remains necessary because trigger conditions and indemnity periods are set independently by each contracting party.