Financial stability in the event of interrupted businessLoss of revenue insurance

Loss of revenue insurance compensates for the lost operating profit as well as for ongoing fixed costs that continue to be incurred despite the shutdown. These costs include, for example, personnel costs, rent payments, leasing installments or ongoing operating expenses.

The decisive factor is the period of indemnity. It defines the period for which the insurer will pay out benefits after an insured property claim. Especially in an industrial environment involving specialized machinery or long replacement times, choosing a realistic period of indemnity is crucial. In an emergency, periods that are too short will lead to considerable gaps in coverage.

Real-world examples have shown that loss of revenue risks are often underestimated. While tangible assets can be quantified in relatively clear terms, restart times depend on many factors: Supply chains, permits, reconstruction, availability of spare parts or external service providers.

Of particular relevance is the correct calculation:

• of the expected annual sales
• of the amounts of coverage
• of ongoing fixed costs
• of realistic recovery periods

Misjudgments can lead to underinsurance or insufficient period of indemnity. For medium-sized companies, this can have consequences that may threaten their existence in the event of a claim.

For manufacturing companies, logistics companies or highly automated production environments, a shutdown of merely a few weeks may already substantially impact their liquidity and customer relationships. Aside from an immediate loss of sales, they might be faced with potential damage to their reputation and long-term shifts in the market.

Loss of revenue insurance is therefore more than just a supplementary component, but serves as a key element in bolstering corporate resilience. Aside from protecting the figures in your balance sheet, it secures the economic sustainability of your entire operation.