Contingent Business Interruption (CBI)
Contingent business interruption (CBI) insurance reimburses lost income and extra expenses when an event at a supplier's or customer's premises, rather than your own, interrupts your operations. Most policies require covered physical damage at the third-party location.
Last updated October 13, 2026
How contingent business interruption works
CBI, also called contingent business income or dependent properties coverage, extends a property policy to losses caused by damage to property owned by others, such as upstream suppliers or downstream customers. It sits alongside standard business interruption, which responds to damage at your own locations.
IRMI describes four conditions that typically line up for coverage: physical damage occurs at the supplier or customer location, it is a type of damage the policy covers, a covered peril caused it, and your operations are interrupted as a result. Payment is usually limited to the period of restoration and often follows a waiting period, or time deductible.
Example
A hypothetical hardware company relies on one contract manufacturer for circuit boards. A covered fire damages the manufacturer's plant, and the company cannot ship product for ten weeks. If that manufacturer is listed or otherwise qualifies under the policy, CBI may respond to lost net income and continuing expenses after the waiting period, subject to the sublimit. If the disruption came from a software outage at the manufacturer with no physical damage, the property CBI coverage would typically not respond.
What to watch for
- Named versus unnamed locations. Policies can give higher limits for scheduled locations than for unnamed ones.
- "Direct" suppliers. Many forms cover only direct suppliers, and deeper tiers may get a small sublimit or none, which can lead to disputes over who counts as direct.
- Covered perils. Events such as cyber incidents, strikes, or pandemics are commonly excluded or limited.
- Waiting periods, often measured in hours or days, and sublimits that cap recovery.
- Proof of loss. Showing that a third party's damage caused your loss can be hard, so keep supplier records.
Contingent business interruption vs. related terms
- CBI vs. business interruption. Standard business interruption responds when your own covered property is damaged. CBI responds when damage happens at someone else's property that your business depends on.
- CBI vs. extra expense. Extra expense pays the added cost of keeping operations running, such as renting temporary space. It is often included with business income coverage and can apply alongside CBI, depending on the form.
- CBI vs. utility services coverage. A loss of power or water from damage at a utility's facility is often handled under a separate off-premises services provision, usually with its own limit and conditions.
- CBI vs. civil authority. Civil authority coverage applies when a government order restricts access to your premises because of nearby covered damage. CBI applies to damage at a business you rely on.
- Property CBI vs. cyber dependent business interruption. A property policy usually requires physical damage. Some cyber policies cover income loss from a technology vendor's outage without physical damage, under their own terms.
Second example: a colocation provider
A hypothetical AI company rents space and power at a colocation facility to run its inference workloads. A covered fire damages the facility and its customers are offline for several weeks. The company loses revenue because it cannot serve its own customers. Whether CBI responds depends on whether the provider's location qualifies under the policy as a dependent property, whether the fire is a covered peril, how the policy treats service providers, and how long the waiting period and period of restoration run. If the disruption instead came from a power outage or software failure with no physical damage at the facility, a property CBI provision would typically not respond, and the company would look to utility services or cyber dependent business interruption wording.
Questions to ask your broker or underwriter
- Does the policy include contingent business income, and what is the limit or sublimit?
- Are suppliers and customers covered by name, by category, or both? Is there a separate limit for unnamed locations, and can an endorsement add locations?
- How does the policy define a supplier, and does it include service providers such as data centers or cloud hosts?
- Does coverage reach beyond direct suppliers to second-tier suppliers?
- What is the waiting period, and how long can the period of restoration run?
- Which perils trigger coverage, and which exclusions apply, such as cyber events, strikes or pandemics?
- What records do we need to keep to prove a supplier's loss caused ours?
Why it matters for technology, AI, fintech and digital-asset companies
Hardware, robotics, and data center businesses often depend on a small number of chip makers, contract manufacturers, or colocation providers. Mapping those dependencies before renewal shows whether the property program names the right locations. Cloud or vendor outages without physical damage generally fall outside property CBI, although some cyber policies address dependent business interruption. See our page for physical AI and hardware companies.
AI companies that rely on rented GPU capacity, colocation space or a single chip supplier have a dependency that looks like a physical supply chain even when the product is software. Digital-asset and fintech businesses often depend on a banking partner, a custodian or a payment processor, and a failure at one of them is usually a financial or operational event, not physical damage, so property CBI is rarely the right tool. Mapping each dependency and asking which policy would respond helps avoid assuming CBI covers more than it does. See AI and emerging tech and first-party coverage.
See how this applies in practice: data center insurance guide and data center insurance for operators and builders.
Related terms
Frequently asked questions
What is contingent business interruption insurance?
Contingent business interruption (CBI) insurance reimburses lost income and extra expenses when an event at a supplier's or customer's premises, rather than your own, interrupts your operations. Most policies require covered physical damage at the third-party location.
What is the difference between business interruption and contingent business interruption?
Business interruption responds to a covered loss at your own premises. Contingent business interruption responds to a covered loss at someone else's premises that you depend on, such as a key supplier or customer. Both are typically tied to physical damage from a covered peril.
Does contingent business interruption cover cloud or IT outages?
Usually not under a property policy, because it typically requires physical damage at a covered location. Some cyber policies offer dependent business interruption for outages at technology vendors. Coverage varies widely, so review the specific wording and any waiting period.
Are second-tier suppliers covered by contingent business interruption?
Often not, or only with a smaller sublimit. Many policies limit coverage to direct suppliers and customers, and some require the location to be named. Ask your broker how the policy defines a supplier and whether unnamed locations are covered.
How long does contingent business interruption coverage pay?
Typically for the period of restoration, which runs until the damaged third-party property could be repaired or replaced with reasonable speed, after any waiting period. Some policies also cap the number of days or the total amount. Check the definition of the period of restoration and any maximum indemnity period.
Do I need contingent business interruption insurance?
It is worth considering if your revenue depends on a small number of suppliers, manufacturers, data centers or major customers. If you have many interchangeable suppliers, the exposure may be smaller. Mapping your dependencies and reading the property policy's dependent property terms is a good starting point.
Does contingent business interruption cover a customer's loss?
Many policies cover damage at customer or recipient locations as well as supplier locations, but forms vary. Some limit coverage to named customers. Ask whether the policy includes recipients of your goods or services and how they are defined.
What records support a contingent business interruption claim?
Typically you will need to show the third party's covered physical damage, your own sales and expense history, contracts or purchase records linking you to that supplier or customer, and evidence of how the damage interrupted your operations. Keeping supplier records current makes a claim easier to document.
Need this coverage, or just a clear answer?
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