Contingent Business Income Insurance
What Does Contingent Business Income Insurance Mean?
Contingent business income insurance is a type of business insurance designed for companies that rely on third parties for significant aspects of their operations. This insurance covers losses incurred due to interruptions affecting those third parties on which the business depends. By providing coverage in such scenarios, contingent business income insurance helps prevent companies from experiencing substantial losses when issues arise with their suppliers.
Insuranceopedia Explains Contingent Business Income Insurance
For businesses whose income depends on a third party fulfilling its obligations, a disruption to that third party can result in significant financial losses. For instance, if a key supplier for a solar panel company experiences a major business interruption, it can lead to substantial losses for the solar company. Contingent business income insurance is designed to provide compensation for these losses. This type of insurance can reimburse lost income and cover ongoing expenses for the business during the period of major interruption.
