Business interruption insurance claims are becoming significantly more expensive due to longer recovery periods, supply-chain constraints and inflation.

A new report by Allianz Commercial found that the average BI claim exceeded $950,000 in 2025, up 30% from 2023. BI claims are now about 70% higher than the average associated property damage claim. While the frequency of claims has remained relatively stable, their rising severity highlights the financial risks companies face when operations are disrupted.

The findings underscore the need for businesses to have contingency plans in place in case operations stop or are severely disrupted after an event.

 

What’s driving the sharp increase

• Longer recovery periods: Businesses are taking longer to rebuild damaged facilities, replace specialized equipment and resume operations, partly due to construction labor shortages.
• Supply-chain constraints: Companies increasingly depend on a limited number of suppliers. Disruptions involving one supplier can halt production across multiple businesses, while shortages of replacement parts delay recovery.
• Inflation: Higher labor, construction material and equipment costs are making repairs and rebuilding more expensive.
• Geopolitical tensions: Conflicts, tariffs and trade disruptions are increasing energy, transportation and material costs while complicating supply chains.
• Rising mitigation costs: Emergency measures such as expedited shipping, temporary production facilities and alternative sourcing are becoming more expensive.

 

Fire and explosion remain the costliest causes of BI claims, accounting for more than 40% of the total value of claims analyzed by Allianz. Natural catastrophes account for 34%.

The report also highlights growing exposure to cyberattacks and technology outages that can shut down operations without causing physical property damage.

 

How to reduce exposure

Employers should take the following steps to prevent disruptions and minimize financial losses:

• Develop and regularly test business continuity and contingency plans that identify critical operations and recovery procedures. Assemble a team with representatives from each department to help draft the plans.
• Identify alternative suppliers and maintain backup sources for essential materials.
• Strengthen fire prevention, equipment maintenance and property protection programs.
• Establish backup power, data recovery and cyber security safeguards.
• Arrange alternative production locations and emergency logistics options.
• Maintain sufficient financial reserves to sustain the business during prolonged shutdowns.

 

Review your coverage

Business interruption insurance, commonly included in commercial property policies or businessowners policies, may cover lost income and continuing operating expenses after a covered event causes physical damage that forces a company to suspend operations.

However, not all BI events result from damage to a company’s facilities. Companies should therefore consider additional protection for other disruptions:

• Contingent BI insurance — May cover lost income when insured physical damage at a supplier’s or customer’s property disrupts the policyholder’s operations.
• Service interruption coverage — Often available through a commercial property policy endorsement, this may cover income losses from qualifying external utility failures, including electricity, water or communications services.
• Cyber BI insurance — May cover lost income and additional expenses resulting from covered cyber incidents, including ransomware attacks and network outages. Some policies also offer protection for disruptions involving third-party technology providers.

 

Call us to discuss your options and review your coverage limits, waiting periods and maximum indemnity periods to ensure they reflect realistic recovery scenarios.

As business interruption losses grow, adequate insurance combined with effective contingency planning can help you withstand disruptions and recover more quickly.

Tags: Measured Risk Insurance Services