Which insurance protects a company against financial losses caused by disruptions at supplier facilities?

• A. Contingent Business Interruption Insurance
• B. Property Insurance
• C. Cyber Insurance
• D. Business Interruption Insurance

Answer: (A)

When you’re protecting a business against disruptions, you need coverage that accounts for events outside your own premises but that still hit your bottom line. Contingent Business Interruption Insurance does this by covering lost income and extra expenses caused by disruptions at external facilities your business relies on—like a key supplier’s plant being damaged or otherwise unable to supply necessary materials. It recognizes that even though the disruption occurs at someone else’s site, your operations and profits can still suffer.

This is different from property insurance, which pays for damage to your own buildings and contents, regardless of whether your operations continue or not. It’s also different from standard business interruption insurance that triggers only when your own premises are disrupted. And cyber insurance covers cyber-related risks rather than physical disruptions to suppliers. So for financial losses stemming from supplier facility disruptions, Contingent Business Interruption Insurance is the most appropriate option.