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🔗 '''Contingent business interruption (CBI)''' is a [[Definition:Coverage | coverage]] extension within [[Definition:Business interruption insurance | business interruption insurance]] that protects an insured business against income losses caused not by direct physical damage to its own premises, but by damage to the property of a third party on which the insured depends — typically a key [[Definition:Supplier | supplier]], customer, or service provider. Standard [[Definition:Business interruption insurance | BI]] coverage responds when the insured's own property suffers a covered peril; CBI extends the scope to indirect exposures embedded in the insured's [[Definition:Supply chain | supply chain]] and revenue chain.

⚙️ A CBI claim is triggered when a covered peril — fire, flood, windstorm, or other insured event — damages the premises of a dependent business, and that damage results in a measurable reduction in the insured's revenue or an increase in its operating costs. For example, if a semiconductor fabrication plant in Taiwan suffers earthquake damage, an electronics manufacturer in Germany insured under a CBI policy could claim the resulting lost profits from production delays. [[Definition:Underwriting | Underwriters]] evaluate CBI risk by analyzing the insured's dependency map: the concentration of suppliers, the availability of alternative sources, geographic exposure to [[Definition:Natural catastrophe | natural catastrophe]] zones, and the expected duration of disruption. Policies typically require that the triggering event be a peril covered under the insured's own property policy, and they may specify named dependent locations or provide broader unnamed coverage subject to sublimits. [[Definition:Loss adjuster | Loss adjusters]] handling CBI claims face the complex task of establishing the causal link between the third-party property damage and the insured's financial loss, often requiring detailed forensic accounting and supply chain analysis.

🌍 CBI has grown in strategic importance as global supply chains have become longer, leaner, and more interconnected. Events like the 2011 Thailand floods — which disrupted automotive and electronics manufacturing worldwide — and the 2021 Suez Canal blockage exposed how a single point of failure thousands of miles away can cascade into significant insured losses across multiple jurisdictions. The COVID-19 pandemic further intensified scrutiny, although many CBI claims were contested on the basis of whether government-ordered shutdowns constituted "physical damage" to dependent properties — a coverage debate that varied in outcome across jurisdictions. For [[Definition:Risk manager | risk managers]], CBI coverage is an essential component of a comprehensive property program, but its adequacy depends on realistic [[Definition:Business impact analysis | business impact analysis]] and transparent communication with underwriters about supply chain dependencies. Insurers, in turn, face [[Definition:Aggregation risk | aggregation risk]] from CBI exposures, as a single catastrophe event at a major industrial hub can trigger claims across hundreds of unrelated policyholders who share the same dependent suppliers.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Business interruption insurance]]
* [[Definition:Supply chain risk]]
* [[Definition:Aggregation risk]]
* [[Definition:Dependent property coverage]]
* [[Definition:Service interruption coverage]]
* [[Definition:Period of indemnity]]
{{Div col end}}

Definition:Contingent business interruption (CBI) - Revision history

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