Indemnity period: why twelve months is usually wrong

Business interruption cover pays for lost gross profit while you recover from an insured event. The indemnity period is how long it keeps paying, and twelve months is the figure on most policies for no better reason than that it is pre-printed.

Count the whole sequence

The clock covers the entire recovery, not just the building work. Making the site safe. Waiting for loss adjusters. Planning permission if the rebuild differs from what stood there. The rebuild itself. Refitting and recommissioning. Then the part everyone forgets: winning back customers who went elsewhere during the closure.

For a manufacturer with specialist equipment on long lead times, or any business in a listed or unusual building, twenty-four or thirty-six months is closer to reality. The extra cost is modest, because the additional months are only reached in the rare severe claims.

It ends when it ends

If the indemnity period expires before trading recovers, cover stops. There is no extension for a rebuild that ran late, and no discretion to apply. That is the whole reason the number deserves more thought than it usually gets.