What SME law firms need to know about new risks involved in business interruption insurance

Chris Cotterill, client account manager at Wesleyan, says office insurance still bears the most pressure for business interruption (BI) insurance – but should we now reconsider the importance of BI within an office policy?

Office insurance still bears the most pressure for business interruption (BI) insurance – but should we now reconsider the importance of BI within an office policy?

First, you need to understand that there are two types of BI insurance on an office policy: loss of income/profit or increased cost of working. For most, the cover has been the former as the loss of the office location would impact the income of the firm. However, in the last 12 months, we’ve seen that firms can be resilient in a crisis, and most have the infrastructure to work remotely.

City firms also must pay out top premiums to incorporate terrorism cover within these costs and, therefore, close to half the premium is in respect of BI cover. If firms look to change this to ‘increased cost for working’ to pay for a Regis office in the event of a fire, then the annual premiums would be substantially reduced.

With work now predominately undertaken on the internet and networks of the firm’s servers, the BI risk now sits more so in the cyber world and the risks there from. Therefore, the BI risk should sit within a cyber insurance policy. We can survive without the office location, but can firms survive without access to their database and emails after a virus or hacker attack?

Some of my clients are still at risk from the loss of high street locations but are also at risk of being entirely dependent on remote working. Each firm should talk to their insurance brokers to ensure that changes to the working culture and everyday risks are covered.