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Dependent Business Interruption (DBI)
Dependent Business Interruption (DBI)Dependent business interruption (DBI), also known as contingent business interruption (CBI), is insurance coverage that protects businesses from financial losses caused by disruptions to their suppliers, customers, or other key third-party entities, essentially covering the financial impact of a third-party’s operational issues on the insured business.
Business Interruption insurance coverage is a critical part of third party risk management (TPRM) strategy.
DBI is a type of insurance that provides financial protection when a business’s operations are negatively impacted by a disruption at a third-party provider, such as a supplier, vendor, or customer.
When a key supplier’s facility is damaged or a major customer’s operations are halted, insured business experience loss of revenue and incur additional expenses. DBI coverage helps to offset these losses.
- An outage at an outsourced web hosting provider prevents an online retailer’s website from operating.
- A Manufacturer cannot produce goods when a critical parts supplier’s facility is damaged by a hurricane.
- A major customer’s operations are halted by flood, suspending sales.
Supply Chain Risk: DBI is crucial for mitigating supply chain risk, as businesses often rely on third-party providers for essential services and materials.
Coverage: Some policies only address technology-related disruptions, so businesses should seek coverage that encompasses both IT and non-IT vendors.
System Failure Trigger: A robust cyber insurance policy should include a “system failure trigger” for DBI, ensuring coverage for disruptions caused by system failures, not just cyberattacks.
