How Much Does Business Interruption Insurance Cost in the UK

Business interruption insurance helps protect your company when it cannot trade due to serious events like fire, flooding or major damage. It covers the income your business loses during the time it is unable to operate.

Many businesses across the UK choose this type of cover to help keep things going if something unexpected happens. It can make a big difference during difficult times. Whether you run a shop, office, café, or a home-based business, having a backup plan offers security.

The cost of business interruption insurance depends on your business type, location and how much cover you need. On average, small UK businesses may pay from £25 to £100 a month. Some may pay more depending on risk level and business needs. It's important to compare policies and understand what each one includes.

In this guide, we explain what affects the cost, what the insurance includes, what small businesses usually pay and whether it is a good choice for you. This way, you can make an informed decision that suits your budget and your business goals.

What Affects the Price of Business Interruption Cover?

Several things can change the price of your business interruption insurance. Understanding these helps you make better choices for your business needs and avoid overpaying.

Type of Business

The kind of business you run matters. A café, shop, or factory will likely pay more than someone working from home. That’s because these businesses often rely on foot traffic, equipment or being in a set location.

Higher-risk industries such as manufacturing or hospitality usually need more cover and might take longer to recover after a problem. This makes insurance more expensive for them. A business that provides online services or consulting from home might pay less due to lower operational risks.

Location

Where your business is based also affects the price. If you're in a flood zone or a place with high crime, your premium will likely be higher. Insurers see these as risky areas where damage or break-ins are more likely.

Being in a newer or well-protected building with good security might lower your cost. Insurers often give discounts for fire alarms, CCTV, sprinkler systems, or strong locks. The safety record of the area and local emergency services may also be considered.

Amount of Cover

The more cover you ask for, the more you’ll pay. If you want to cover staff wages, rent, bills and loss of income, your premium will increase. Basic policies cost less but may not offer full protection. Be clear about what your business really needs.

The time your cover lasts, known as the indemnity period, also matters. Policies covering 24 months will cost more than those covering 12. But longer periods give your business more time to recover fully and avoid further financial issues. Choose a timeframe that reflects how long it might take you to return to normal trading.

What Business Interruption Insurance Covers

This insurance helps replace lost income if your business cannot trade because of damage or disaster. It does not cover the physical damage—that’s covered by property insurance. It helps with what you lose during the time you cannot operate and helps keep you financially stable.

Most policies include:

- Loss of profit and income

- Rent or mortgage payments

- Staff wages

- Utility bills

- Costs of temporary relocation or equipment hire

Some insurers may offer cover if your key supplier or partner cannot operate, affecting your ability to trade. Not all policies include this, so check the terms before you buy. If you rely on one or two suppliers, this can be an important feature to look for.

Only listed risks—like fire, storms, or vandalism—are covered. You may need to add extras to protect against other causes like power failures or broken equipment. It’s best to read the full list of covered events before choosing a plan.

Additional benefits may include professional fees for accountants or lawyers helping you make a claim or covering increased costs to speed up your recovery. These extras can be helpful in large-scale disruptions.

What You Can Expect to Pay as a Small Business

Small businesses usually buy business interruption insurance as part of a package, along with public liability and property cover. This is often cheaper than buying each type of cover separately and ensures wider protection.

Premiums can range from £300 to £1,200 per year. Many small businesses pay between £500 and £800. That’s about £40 to £70 a month, depending on your business type, size, and location.

A small high street shop that depends on customers walking in is likely to pay more than a freelance worker based at home. This is because the shop is more exposed to risks that might stop it from trading. If you have stock, staff, or daily customers, your needs are greater than someone working alone.

Most insurers let you pay monthly. This can help with budgeting and cash flow. It’s also a good idea to compare quotes. Insurers use different ways to assess risk, so prices vary. Some may offer loyalty discounts or reduced prices if your business has safety measures in place.

Always read what each policy includes. Some cheaper options might not cover relocation or extra staffing costs. Paying a bit more could offer better long-term value and reduce stress if something goes wrong.

Is Business Interruption Insurance Worth it for My Business?

Many small business owners ask if this type of insurance is really needed. The answer depends on how much your business would suffer from being closed and how quickly you could recover. If even a short pause in trading could cause money problems, this cover may be essential.

Could You Afford to Close for Weeks?

Imagine your shop, café or workshop had to shut for a month. Could you still pay your bills? Could you keep your team? If not, this insurance could make a big difference. It gives you money to keep things running during the recovery period and protects your reputation too.

Without it, you might need to use savings or even close permanently. Most small businesses don’t have a large emergency fund, so help from insurance can be vital.

Do You Rely on a Physical Location?

If your business depends on being in a certain place, like a salon or retail shop, this insurance can be very useful. A fire or flood could stop you from trading for weeks or months. And if your place needs repairs, customers may go elsewhere in the meantime.

Even if you work from home, think about how a supplier issue or postal delay might affect you. Some policies cover these kinds of problems too, helping you avoid delays to customer orders or payments.

Peace of Mind

Even if you never need to use the policy, having it can give you peace of mind. You know that if the worst happens, you’ll have support. This can make it easier to plan and grow your business confidently.

Business interruption insurance is not free, but it can save your business from major loss. If you rely on income coming in regularly and wouldn’t cope well with a break in trading, it may be worth the cost. For many UK businesses, the small monthly cost is worth the peace of mind and financial safety it provides.