What if your business has to stop trading, not because your own premises are damaged, but because a key supplier can no longer deliver? Whether business interruption due to supplier failure is covered depends on your policy’s wording and the event that triggers cover. Standard business interruption cover and supplier-related extensions can respond to different events, so don’t assume that a disruption to operations automatically means a loss is insured.Lost income, continuing expenses and recovery time can all be affected when supply stops. This article explains the difference between direct and supplier-caused interruption, and how to review policy triggers, exclusions and the indemnity period. It also sets out practical steps for mapping supplier dependencies and preparing for disruption. A broker can help relate your business risks to the insurance wording and cover arranged. Key Takeaways Map the suppliers your operations rely on and identify how a delivery failure could affect production, sales or service. For business interruption due to supplier failure, cover can depend on the policy wording and the event that triggers it. Review definitions, extensions, exclusions, waiting periods and indemnity periods to identify questions about your cover. Keep supplier details current, document key dependencies and consider workable alternatives as part of continuity planning. Table of Contents Business interruption due to supplier failure: what can disrupt your operations? How to assess business interruption cover for supplier failure Prepare for supplier failure and review your insurance with a broker Business interruption due to supplier failure: what can disrupt your operations? A supplier outage can affect far more than stock levels. If a manufacturer cannot provide a key component, production may stop. If a wholesaler misses deliveries, sales may fall. If an essential service provider goes offline, your business may struggle to serve customers. The resulting pressure on cash flow can arise even when your own premises and equipment are undamaged.Supplier-related business interruption is the operational and financial impact on your business when a supplier problem prevents or limits your ability to trade. The cause could be damage at the supplier’s premises or another event that affects its ability to deliver. Whether your resulting loss is insured depends on the policy wording, the events covered, any applicable conditions and relevant extensions.How is supplier-caused interruption different from direct business interruption? Direct business interruption begins with an insured event affecting your own business, such as fire damage at your premises that forces a temporary closure. Supplier-caused interruption begins elsewhere: a supplier is affected, and the consequences flow through to your operations. A dependency explains how disruption can reach your business, but it does not establish that a policy trigger has been met.Supplier … [Read more...] about Supplier Failure: What Australian Businesses Need to Know