Contingent Business Income
Coverage for lost income when a key supplier or customer suffers a property loss that disrupts the insured's business operations.
What It Is
Contingent Business Income (CBI) coverage, also called Dependent Properties coverage, protects the insured from loss of income caused by physical damage to property owned by others—specifically the insured's key suppliers, customers, manufacturers, or service providers. When a critical business partner suffers a covered loss that disrupts the insured's revenue stream, CBI coverage replaces the lost income.
CBI coverage recognizes that modern businesses operate within interconnected supply chains. A manufacturer may depend on a single supplier for critical components, or a retailer may depend on a single distribution center. If that supply chain link is broken by a fire, tornado, or other covered peril, the insured's business suffers even though their own property is undamaged.
CBI can be added to the Business Income coverage by endorsement or scheduled on the policy with specific dependent properties listed. Some forms provide blanket CBI coverage (any dependent property), while others require scheduling specific locations. The coverage applies the same causes of loss form as the underlying property policy.
Why It Matters for Brokers
Supply chain risk has become a dominant concern for commercial property underwriters and insureds. Brokers who identify key supplier and customer dependencies and recommend CBI coverage demonstrate sophisticated risk analysis. Many businesses do not realize their supply chain concentration creates a single point of failure until a loss occurs. Proactive CBI placement is a significant value-add service.
Real-World Example
A custom cabinet manufacturer sources all hardwood from a single lumber mill. The mill suffers a devastating fire and cannot supply lumber for 5 months. The cabinet manufacturer, with $3.2M in annual revenue, loses $1.1M in contracts because they cannot fulfill orders without their lumber supply. Their standard Business Income coverage does not respond because their own property is undamaged. With CBI coverage of $1.5M (added for $2,800 annually), the full $1.1M loss is covered.
Common Mistakes
- 1Not asking clients about supply chain concentration during the risk assessment—many businesses depend on one or two critical suppliers without recognizing the exposure.
- 2Assuming standard Business Income coverage includes CBI—it does not; CBI must be specifically endorsed or scheduled.
- 3Setting CBI limits based on the supplier's value rather than the insured's potential lost income, which can be much larger than the supplier's property value.
How brokerageaudit.com Handles This
brokerageaudit.com's Submission Intake includes supply chain dependency questions that identify key suppliers, customers, and single-source relationships. The platform flags accounts with high supply chain concentration and recommends CBI coverage with limits based on the insured's revenue exposure, not the supplier's property value. The Policy Checker verifies that CBI is included when supply chain risks are identified.