What Is Business Interruption Insurance? A Guide for Accountants

Professional indemnity insurance and management liability insurance are widely recognised as essentials for an accounting practice. We would add one more: office and contents insurance. Safeguarding your practice means ensuring business continuity, even when you’re caught off guard. You could fall victim to a fire that forces temporary relocation or a cyber attack that shuts down your IT systems.

So, what is business interruption (BI) insurance, and how can it help? BI insurance provides financial protection when unforeseen circumstances disrupt your normal operations and devastate your cash flow. It ensures your practice can weather unexpected disruptions and maintain client service continuity.

What is Business Interruption Insurance?

BI insurance is a type of cover designed to protect your practice’s income if you’re unable to trade because of an unforeseen event – say a flood, fire, theft, or even a long-term power outage that forces you to close your offices. Consider the financial impact of a three-month office closure during peak filing season. Beyond lost revenue from new engagements, you’ll still face ongoing expenses: rent, staff salaries, professional indemnity premiums, and more. These costs add up quickly whilst income streams dry up.

Where office contents and equipment insurance covers physical property loss, damage, or theft, business interruption policies focus on the financial consequences of being unable to operate normally. BI insurance provides financial support, helping you to maintain your practice’s financial stability during vulnerable periods. BI insurance helps ensure you can maintain service levels even when facing unexpected challenges.

Why is business interruption insurance important for accountants?

Are you running your firm from fixed offices or shared premises? Your ability to access files, serve clients, and meet deadlines could be severely impacted by a fire, water damage, vandalism, and a host of other scenarios. Any disruption that prevents normal service delivery creates immediate financial pressure and potential professional liability exposure. For accounting professionals, this kind of disruption doesn’t just lead to lost income; it can damage your client relationships and reputation, delay submissions, and result in penalties for both you and your clients.

BI insurance ensures that if the worst happens, your cash flow is protected while you recover and rebuild. It’s a safety net that gives you the financial breathing room to recover without compromising client service.

What Does it Cover?

While each policy may differ slightly depending on the provider and their specific inclusions and limitations, BI insurance generally includes the following…

Loss of income

Business interruption insurance for accountants compensates for the income you would have earned during the period of downtime. It’s typically calculated based on your practice’s previous financial performance (the insurer might use a 12-month average to establish a baseline and project what you would have earned had the interruption not occurred). For accountancy practices, this may include lost fees from client services, tax return preparation, audit work, or consultancy engagements. Some policies might include provisions for trending adjustments, recognising that growing practices might have earned more than historical averages suggest.

Operating expenses

Even if your business can’t operate, fixed expenses like rent, employee salaries, utilities, loan payments, software subscriptions, insurance premiums, and professional subscriptions still need to be paid. BI insurance helps cover these ongoing costs, reducing the financial strain during your recovery period.

Additional expenses

Sometimes, continuing your operations means incurring extra costs, such as renting temporary office space, hiring extra IT support, replacing equipment, or data recovery services. These necessary (but unplanned) expenses could be included in your cover if they help you resume normal operations faster.

Assessing business needs

Every practice is different. A sole practitioner with a home office may have minimal disruption risk compared to a small firm operating from leased premises. Understanding the specific vulnerabilities of your practice is key to choosing the right level of cover. Work with a provider that understands the accountancy sector to ensure your policy matches your risk profile. For example, ICPA’s office protect insurance policy, underwritten by A-rated insurer AXA, is available with our Premium membership and includes business interruption coverage. Standard policies offer 12-month indemnity periods, but the basis of cover and indemnity period can be tailored to suit your needs.

Understanding policy limitations

Like any insurance, BI cover has exclusions (outside the standard scope of the policy). Common exclusions include losses arising from pandemics (and government-ordered closures), cybercrime, utilities failures, supply chain issues, or gradual deterioration of property. There’s also often a waiting period before benefits commence. Be sure to check the policy wording around what qualifies as a “covered event” and the waiting period.

Policy limits and calculation methods vary significantly between insurers. Some policies cap total payouts at specified amounts, whilst others limit monthly payments to percentage thresholds of the total sum insured. Make sure you review these provisions to check they align with your practice’s financial requirements.

Supporting documentation

To claim from your business interruption policy, you’ll need to provide detailed financial records, such as historical income reports and expense receipts. As an accountant, you’re uniquely positioned to provide this information, but it’s still important to maintain up-to-date documentation and understand the insurer’s process ahead of time.

Why Every Accounting Practice Should Consider BI Insurance

The unexpected can and does happen, whether it’s a burst pipe, a building fire, or an IT breakdown. For accountants, time-sensitive client obligations and trust-based relationships mean even short-term disruption can have long-lasting consequences. Business interruption risks affect practices of all sizes, but the financial impact of operational disruptions often proves disproportionate to practice size, as smaller operations typically have fewer resources to absorb unexpected losses.

Business interruption insurance for accountants protects your income and your ability to meet client expectations and maintain your professional standing. It’s not a luxury; it’s a critical layer of risk management. You already mitigate financial risks for your clients – it’s equally important to do the same for your own practice.

How to get insurance for your practice

ICPA members benefit from access to business interruption coverage through our office protect insurance, designed for UK accountancy practices and sole practitioners. Underwritten by A-rated insurer AXA, this comprehensive policy includes £250,000 gross income coverage with a 12-month indemnity period, alongside protection for your office contents, portable equipment, and more.

Office Protect is available as standard with ICPA Premium membership and as an add-on for other membership tiers. It’s tailored for the realities of accountancy work and gives you peace of mind that if the unexpected happens, your practice and income are safeguarded. Contact ICPA today to learn more about our Office Protect Insurance and how BI coverage can strengthen your practice’s financial security.