Dependent Business Interruption: Contingent Protection from Third-Party IT Outages

Your own systems may remain secure and operational, but your business can still be critically disrupted if a third-party technology provider suffers an outage, cyber attack, software failure, or operational incident. 

For SaaS companies, ecommerce businesses, fintech platforms, professional services firms, logistics companies, and digitally enabled retailers, that dependency can create immediate financial loss. Which is not traditionally covered under your Cyber Insurance because you haven’t suffered a cyber-attack or data breach

Dependent Business Interruption (BI), sometimes referred to as Contingent BI, is designed to protect against loss of income and increased costs of working where a third-party provider disruption prevents your business from operating as usual.

Dependent BI claims are usually subject to a time retention, often referred to as a waiting period. This means the third-party outage must continue for a defined period before the policy begins reimbursing lost income or increased costs of working.

Common waiting periods are usually 12 hours, with longer periods available up to 24 hours for a lower cost, or potentially 8 hours at a higher premium.

For example, if the policy has a 12 hour waiting period and the cloud provider outage lasts six hours, the loss may fall entirely below the deductible period. If the outage lasts 36 hours, the policy may only respond to the loss after the waiting period has been satisfied, depending on the wording.

To find about more about the range of different covers available, read our technical guide detailing the different cyber insuring clauses.