Business Interruption

When your vehicle is off the road due to an accident

We have always emphasised the importance of Business Interruption cover in a Business or Trade Insurance policy and this same risk applies to other areas of insurance too including Heavy Transport. Simply, if your vehicle is involved in accident, you are then no longer able to generate income from it whilst it is off the road being repaired.

In recent years, some insurers have chosen to innovate and bring in some sort of cover for this critical area.

There are two types of extensions/options available:

There are advantages and disadvantage for either, it just depends what suits your type of business best.

For instance, you may have set contracts in place for a period of time, and a vehicle off the road may jeopardise maintaining that contract. A substitute vehicle will mean that you can continue to fulfil the contract while your own vehicle is being repaired.

However, what if you are injured? Then the Loss of Income may suit as it replaces the income you would have generated during this down time. How will you pay for the following overheads after an accident?

  • Finance repayments on the vehicle
  • Ongoing business expenses. e.g. wages
  • Insurance premium funding payments
  • Workers’ Compensation instalments
  • Family living expenses. e.g. mortgage or rental payments
  • School fees
  • Utility bills
  • Food and essentials
  • Private. e.g. family vehicle loan repayments

 Substitute Vehicle

When a client has an accident they face the threat of losing their contracts while their vehicle is being repaired. Some insurers offer cover for Loss of Income while the truck is off the road, but that doesn’t cover the loss of income through having no contract to service with your truck when you get it back!

What truck drivers need is a replacement truck, and to some this is real Downtime Insurance.

First there has to be a claim for damage to a Vehicle caused by an Accident has been admitted under the material damage (Section 1) of your Policy; and the Vehicle has an amount for ‘Down Time Monthly Benefit’ set out for it in an Endorsement attached to the policy.

The insurer will choose either to pay the amount of the Down Time Monthly Benefit divided by the number of days in each month for which the Down Time Monthly Benefit is payable; or the cost of hiring a similar and suitable replacement vehicle, provided the insurer has approved the hire agreement in advance and the daily hiring costs do not exceed the daily benefit payable in above either for each day after the day notification is received of the Accident, during which the Vehicle is undrivable as a result of the Accident or being repaired as a result of the Accident prior to the commencement of the repairs. If the Vehicle is determined by the insurer to be a total loss as a result of the Accident, for 7 days after they make a settlement offer to you. This be for a period no longer than the Indemnity Period as set out on the Policy Schedule. If a similar and suitable vehicle is not available for hire for any period of time for which the Down Time Benefit is payable, Insurers will pay you an amount equal to the normal cost of hiring such a vehicle.

There are exclusions and insurers will not pay any claim for Down Time Insurance for any period of time set out on the Schedule as being the ‘Excess Period’ (time excluded by the Excess Period is additional to all other excluded time As well for after the day on which Insurers are satisfied repairs have been adequately completed and the Vehicle is first offered to you for release after repair; where the Vehicle is undergoing any process other than repair of damage related to the Accident; relating to any delay in repair caused by any measure or restriction imposed by any government or public authority; relating to any delay in repair caused by any business of Yours being placed in liquidation, receivership or administration or otherwise ceasing to operate.

Further they will not pay any benefit for a total period of time longer than the Indemnity Period as set out on the Schedule for any one Vehicle for any one Period of Insurance. Any payment/s for Down Time Insurance cover will be made by Us monthly.


 Loss of Income Option

Downtime/Business Interruption is an extension available to some Commercial Motor Vehicle Insurance Policy holders offering the insured significant financial benefits in the event of their vehicle not earning an income whilst off the road being repaired due to an insured event. This cover is available to policies covering 1 to 9 trucks (with a Gross Vehicle Mass greater than 5 tonnes) where insured on a comprehensive basis. Downtime/Business Interruption is available on new policies or can be endorsed to or at renewal for existing policies. Cover is arranged from 1 to 4 months cover, so you need to nominate the monthly period and limit of cover required per vehicle. Deferment (excess) period is 7 days from the date the vehicle arrives at chosen repairers for completion of repairs.

 With this cover there are restrictions on what sort of vehicles can obtain this extension. Unfortunately Plant and machinery, Pit mining activities, Vehicles used for the transportation of refrigerated goods, Vehicles working within the confines of airports or providing airside services, Vehicles capable of being used on rails or water, Buses and coaches, Tow trucks, Motor trade risks, Vehicles on dry hire, Underground mining, Mobile cranes, Forklifts and the like cannot obtain this extension.


As discussed earlier, there are advantages in either and it depends on your circumstances. If you have a long term contract to supply transport services, having a substitute vehicle so you do not lose the contract to someone else is an advantage. The alternate Loss of Income cover will only last a short period and if you lose a long term contract it could be financially more devastating in the long term.

However, if you are badly injured, you would need a substitute driver to use a substitute vehicle, with the revenue generated going to the fill in driver, possibly more if it is difficult to find someone. Unless you have Personal Accident or Loss of Income cover to compensate for the injuries, you will not be generating any sort of income to survive on. Remember though this is only to the time the vehicle is fully repaired.

Either way, these are extensions to your Heavy Motor policy which is vital and should definitely be considered.

If you would like to discuss these risks, talk to us at CPR Insurance Services. We are CPR – experts who will save you!