Business Interruption Insurance for Food & Beverage Manufacturers

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Protect your profits, payroll and cashflow if your factory can’t trade after fire, flood, breakdown or supply chain disruption.

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We compare quotes from leading insurers

  • Allianz
  • Aviva
  • QBE
  • RSA
  • Zurich
  • NIG

BUSINESS INTERRUPTION INSURANCE THAT HELPS YOU RECOVER FAST

Why Business Interruption Matters in Food & Beverage Manufacturing

Food and beverage manufacturing is built on momentum: raw materials arriving on time, production lines running to schedule, chilled and frozen storage holding temperature, and outbound deliveries leaving when customers expect them. When something breaks - a fire in the production area, a flood in the warehouse, an electrical failure, a major machinery breakdown, or a contamination incident - it doesn’t just damage property. It interrupts your ability to trade.

That trading interruption is often where the biggest financial impact sits. You may still have payroll to meet, rent and finance to pay, and contracts to honour. You could face wasted ingredients, missed retailer slots, and penalties for late delivery. Even after repairs, it can take time to rebuild stock levels, rebook audits, requalify lines, and restore customer confidence.

Business Interruption (BI) insurance is designed to protect your income and help your factory keep its head above water while you recover. Insure24 arranges BI cover for food & beverage manufacturers across the UK, tailoring sums insured, indemnity periods, and extensions to match the reality of your operations - whether you’re a bakery, chilled/frozen producer, drinks manufacturer, co-packer, or multi-site processor.

What Does Business Interruption Insurance Cover?

Business interruption cover usually sits alongside your property and/or engineering (breakdown) insurance. It is designed to pay for financial losses that follow an insured event - not just the cost of repairing damage. For food manufacturers, BI can be structured around gross profit (profit + fixed costs), revenue, or increased cost of working, depending on how your business accounts are prepared and how insurers structure the policy.

BI can help you survive the recovery period by covering lost income and contributing to ongoing costs that don’t stop just because production does. It can also cover certain additional expenses you incur to reduce your overall loss (for example, hiring temporary cold storage or outsourcing production).

  • Loss of Gross Profit – Protects the trading profit and standing charges you would have earned.
  • Fixed / Standing Charges – Rent, rates, finance payments, key contracts and other ongoing overheads (policy dependent).
  • Wages / Payroll – Often included as a standing charge or by specific selection to retain key staff.
  • Increased Cost of Working (ICOW) – Extra spend to keep trading or reduce the interruption impact.
  • Additional Premises – Temporary facilities (where covered) to maintain production and fulfil orders.
  • Claims Preparation Costs – Professional fees (e.g., accountants) to help prepare a BI claim (where included).
  • Denial of Access – Some policies can cover loss if authorities prevent access following nearby insured events (wording varies).
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Typical BI Triggers in Food & Beverage Manufacturing

Food manufacturing interruptions often cascade across the operation: property damage stops production, production stoppage impacts deliveries, missed deliveries trigger lost customers, and recovery takes longer than expected due to specialist equipment lead times. Below are common incident types that lead to BI claims.

  • Fire, smoke and heat damage to production lines, ovens, packaging areas and electrical rooms
  • Flooding, escape of water, or storm damage affecting warehouses and plant rooms
  • Machinery breakdown halting line output (when BI is linked to engineering cover)
  • Refrigeration failure impacting chilled/frozen storage and forcing shutdown
  • Contamination events requiring cleaning, disposal, and revalidation
  • Supplier disruption (where extensions are arranged and triggered by insured perils)
  • Utility interruption (where covered) affecting power, water or gas critical to production
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Choosing the Right Indemnity Period

The indemnity period is how long the BI policy can pay for losses following an insured event. For food manufacturers, it’s common to underestimate this. Repairs might take weeks - but the full recovery can take months.

Think beyond “how quickly can we fix the building?” and focus on “how quickly can we restore turnover?” That can include lead time for specialist equipment, commissioning, hygiene validation, audits, staff retraining, and rebuilding stock so you can meet customer schedules again. In a cold chain operation, you may need to source temporary storage, move product, or use third-party logistics while you recover.

Common Indemnity Period Options

  • 3 months – Often too short for complex manufacturing risks
  • 6 months – Can suit smaller operations with simpler equipment and alternative capacity
  • 12 months – Common for many manufacturers with specialist plant and contracts
  • 18–24 months – Consider for large sites, bespoke lines, or major rebuild risk

Insurers will often price BI based on the indemnity period and the robustness of your risk controls. We help you balance practical recovery needs with cost, ensuring the policy is structured sensibly rather than just cheaply.

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How to Set the Correct BI Sum Insured

The most common BI problem we see is underinsurance. If the gross profit (or revenue) figure is too low, the policy may not pay enough to keep the business stable. Underinsurance can also trigger an “average” clause (depending on wording), reducing the claim payout proportionally.

For a manufacturer, gross profit isn’t the same as net profit. Gross profit for BI purposes usually means: turnover minus variable costs, leaving the amount available to cover fixed costs and profit. Food manufacturing variable costs often include raw materials, packaging, and certain production costs - but many overheads remain fixed during an interruption.

If you are growing quickly, the figure needs to reflect expected turnover for the coming year, not last year’s accounts. Seasonal peaks also matter: if your busiest period is Christmas, Easter, summer, or major retail promotions, BI should be suitable for those peak exposures.

BI Figures We Often Review With Manufacturers

  • Annual turnover and peak turnover periods
  • Gross profit calculation and variable cost assumptions
  • Payroll / key staff retention needs
  • Finance agreements and fixed contract commitments
  • Rent, rates, utilities, and minimum service contracts
  • Critical customer contracts and penalty exposure

If you’re unsure, we’ll guide you through what insurers normally expect and help you structure a sum insured that makes sense for your risk profile. The goal is simple: if a serious incident happens, you have enough cover to recover properly.

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BI Extensions That Can Be Important for Food & Beverage Manufacturing

Many manufacturers need BI extensions beyond the basic “damage at your premises” trigger. Depending on your operation, you may want to explore optional extensions that reflect how you actually lose money when disruption happens.

Supply Chain & Dependencies

  • Supplier Extension – Loss following insured damage at key suppliers (wording varies).
  • Customer Extension – Loss following insured damage at key customers (where relevant).
  • Contract Packaging / Co-Manufacturing – Where you rely on third-party capacity.
  • Cold Storage / Logistics Dependencies – Where product is stored off-site.

These extensions are not one-size-fits-all. Insurers will usually want details: who the dependency is, how much turnover relies on them, and what alternative arrangements exist.

Utilities & Access

  • Utilities Interruption – Loss caused by failure of power, water, gas (availability varies).
  • Denial of Access – When authorities prevent access due to nearby insured events (policy dependent).
  • Loss of Attraction – More common in retail/hospitality, but can apply in certain contexts.
  • Additional Increased Cost of Working – Wider allowance for mitigation actions.

Food manufacturers can be particularly exposed to utilities issues (power/gas) and water supply disruptions. If utilities are critical, we’ll discuss practical cover options and realistic triggers.

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Reducing BI Risk: Practical Steps Insurers Like to See

Business interruption is not just an insurance problem - it’s an operational resilience problem. Strong controls reduce the chance of a shutdown and can improve your insurance terms. Here are practical steps many manufacturers implement.

Operational & Engineering Controls

  • Planned preventative maintenance (PPM) for critical machinery and refrigeration
  • Spare parts strategy for compressors, motors, belts, and critical components
  • Temperature monitoring with alerts and documented call-out procedures
  • Fire risk management: housekeeping, extraction systems, electrical inspections
  • Generator/backup power planning (where feasible) and tested changeover procedures

Business Continuity Planning

  • Documented business continuity plan with clear roles and supplier contacts
  • Alternative production arrangements (co-packers, sister sites, rental equipment)
  • Alternative cold storage providers for chilled/frozen stock
  • Customer communications plan and contract review process
  • Data backup and cyber resilience for production/ERP systems
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Why Arrange Business Interruption Cover Through Insure24?

BI cover looks simple on the surface, but it’s one of the areas where policy structure matters most. A low premium is not helpful if the indemnity period is too short, the sum insured is wrong, or key dependencies are not included.

  • We help you structure gross profit/revenue sums insured accurately
  • We advise on indemnity periods suitable for specialist plant lead times
  • We can explore supplier/customer/utility extensions where relevant
  • We compare terms from insurers experienced in food manufacturing risk
  • We support you through claims with clear documentation guidance
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How to Get Business Interruption Insurance

To quote BI properly, insurers typically need a clear picture of your business model, financials, and key risks. We’ll help you present the information cleanly so the insurer can offer realistic terms.

  • 1. Tell us about your manufacturing process, premises and key equipment
  • 2. Share turnover, gross profit/revenue figures and seasonal peaks
  • 3. Confirm critical dependencies: suppliers, customers, utilities, cold storage
  • 4. Choose an appropriate indemnity period for worst-case recovery
  • 5. Compare quotes, select cover and get insured
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FREQUENTLY ASKED QUESTIONS

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What is business interruption insurance?

Business interruption (BI) insurance is designed to protect your financial position if you cannot trade normally after an insured event (often property damage such as fire or flood). It can cover loss of gross profit (or revenue) and contribute to ongoing costs, plus certain extra expenses incurred to reduce the interruption impact, subject to the policy wording.

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Is BI insurance important for food manufacturers?

Yes. Food and beverage manufacturing is highly time-sensitive, with perishable stock, tight delivery schedules and costly downtime. BI can help protect profit and cashflow while you recover, especially where specialist equipment lead times and hygiene validation add weeks or months to recovery.

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How do I choose the right indemnity period?

Choose an indemnity period based on how long it would realistically take to repair/rebuild, replace specialist machinery, recommission lines, pass hygiene validation/audits, rebuild stock and restore turnover. Many manufacturers opt for 12 months, but larger or more complex sites may need 18–24 months.

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What is gross profit for BI purposes?

For BI, gross profit usually means turnover minus variable costs, leaving the amount that would have contributed to fixed costs and profit. The exact calculation can vary by insurer wording and your accounts. Getting this figure right is important to avoid underinsurance.

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Can BI cover machinery breakdown or refrigeration failure?

It can, when BI is linked to engineering/machinery breakdown cover and the policy includes the right triggers. For chilled and frozen operations, refrigeration breakdown and deterioration/spoilage options may also be relevant, subject to underwriting and policy terms.

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Does BI cover supplier disruption?

Some policies can include supplier (or customer) dependency extensions, usually triggered by insured damage at the dependent location. Cover varies significantly, and insurers typically need details of the dependency and the percentage of turnover it represents.

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How much does business interruption insurance cost?

BI premiums depend on your turnover/gross profit, the indemnity period, your property and equipment risk profile, claims history, and the level of extensions you choose. The quickest way to get an accurate price is to request a tailored quote.

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What information do I need to get a BI quote?

Typically: turnover, gross profit (or revenue) figures, details of your premises and machinery, your production process, key contracts, and any major dependencies such as single-source suppliers, utilities reliance, or off-site cold storage. We’ll guide you through it.

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