Business Interruption Insurance (BI) covers the loss of income or profit that a law firm suffers when its operations are disrupted due to an unexpected event such as:
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Fire or flood
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Theft or vandalism
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Major equipment failure
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Utility outages
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Cyberattacks (if included)
It ensures the firm can continue paying salaries, rent, and bills, even if the office is temporarily unusable.
🛡️ Why Is It Important for Law Firms?
Law firms rely heavily on physical offices, files, and IT systems. A short-term disruption can cause:
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Missed court deadlines
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Interrupted client service
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Lost revenue
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Reputational damage
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Breach of contract risks
BI insurance fills the income gap while the firm recovers.
📋 What Does It Cover?
| Coverage Area | Example |
|---|---|
| 💰 Lost Revenue | Covers net income lost while operations are down |
| 👩💼 Staff Salaries | Ongoing payroll even if staff can’t work |
| 🏢 Rent and Utilities | Fixed expenses like rent, phone, power |
| 🔁 Temporary Relocation | Cost of setting up operations in a temporary location |
| 📞 Additional Expenses | Overtime pay, IT recovery, outsourcing fees |
| 🛠️ Repair-Delay Costs | Extra losses caused by delayed repair or supply chain issues |
🚫 What It Does NOT Cover
| Not Covered | Alternative Cover Needed |
|---|---|
| Direct damage to property | Covered by Office & Contents Insurance |
| Cyber events (unless added) | Covered by Cyber Liability Insurance |
| Legal errors or negligence | Covered by Professional Indemnity Insurance |
| Voluntary shutdowns | No payout if closure was a management decision |
| Government closures (usually) | Unless specified in policy (e.g. pandemic coverage exclusions) |
🧮 How Is the Payout Calculated?
Payouts are based on your:
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Gross profit (turnover – variable costs)
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Historical trading figures
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Expected recovery time
The policy usually includes:
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Indemnity period: The time you’ll be compensated (commonly 12, 24, or 36 months)
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Waiting period: A small delay (e.g., 24 hours) before coverage starts
Choose an indemnity period that reflects how long it would take to fully recover—especially if you rely on custom office space or in-house servers.
💷 Typical Premiums for Law Firms
| Firm Type | Estimated Annual Cost (Add-on) |
|---|---|
| Small firm (1–5 staff) | £100 – £250 |
| Medium firm (6–15 staff) | £250 – £600 |
| Large firm (20+ staff) | £600 – £2,000+ |
Premiums depend on:
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Annual turnover
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Indemnity period
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Office location and risk level
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Type of legal work (some areas are riskier)
🏢 Example Claim Scenario
Scenario:
A fire in a shared office damages your suite. You must shut down for 3 weeks during restoration.
Business Interruption Insurance pays for:
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Lost client income during the closure
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Staff wages and rent during downtime
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Temporary office setup expenses
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Marketing expenses to notify clients of relocation
✅ Recommended Providers (UK)
These companies offer BI insurance directly or as part of business packages:
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Hiscox
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AXA
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Zurich
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QBE
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Allianz
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Direct Line for Business
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Gallagher (broker)
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Simply Business (aggregator)
🧩 Often Bundled With:
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Office & Contents Insurance
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Public Liability
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Cyber Insurance
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Professional Indemnity Insurance
This keeps premiums lower and ensures smooth claims handling.
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