03 March 2026
Why your Business Interruption indemnity period matters more than ever
4 minutes
For classic and specialist motor trade businesses, Business Interruption cover is often one of the least revisited parts of an insurance programme. Yet in today’s environment, an inadequate indemnity period is one of the most common and costly gaps we see.
Rising repair times, parts scarcity, planning delays and weather-related losses all mean that recovery after a loss is taking longer than many businesses expect. If your indemnity period is too short, the policy may expire before your turnover fully recovers, leaving you to absorb the financial impact at exactly the wrong moment.
What is an indemnity period and why does it matter?
The indemnity period is the maximum length of time your Business Interruption policy will pay for lost gross profit following an insured event, such as a fire, flood or major storm damage. It is not about how long it takes to physically repair a building, but how long it takes your business to get back to where it was financially before the loss occurred.
For classic motor trade businesses, that distinction is critical.
A workshop may be repaired in nine or twelve months, but the commercial recovery can extend far beyond that. Work in progress may be lost or delayed, customer confidence can take time to rebuild, and specialist parts and labour constraints can slow the return to normal trading levels.
Thinking realistically about a worst-case scenario
When we speak to classic motor trade clients about indemnity periods, we encourage them to step back and consider a genuine worst-case scenario, such as a major fire at the premises. To establish what a suitable indemnity period would be for your business, it is worth thinking through the following questions carefully:
- How long would it take for the police and fire service to complete their investigations, and for the insurer to confirm that cover will operate?
- How long would it take for debris to be cleared, planning permission to be granted if required, and the premises to be rebuilt or reinstated?
- How long would it take to replace stock, tools, machinery, plant and contents, and to begin trading again in a meaningful way?
- Crucially, how long would it take for the business to return to the same financial position it was in the day before the loss?
For many classic and specialist operators, the honest answer to these questions points well beyond a standard 12 month indemnity period.
Why classic and specialist risks need longer recovery periods
Classic and collector vehicle businesses face challenges that standard motor trade operations do not.
Repairs and restorations rely on specialist skills with limited availability. Parts are often rare, bespoke or sourced internationally. Vehicles mid restoration represent significant tied up capital, and delays can have knock on effects for cashflow and client relationships.
Add increasing exposure to extreme weather, longer rebuild timelines and supply chain friction, and the reality is that a serious loss can disrupt trading for far longer than many businesses anticipate.
In our experience, an indemnity period that looks adequate on paper can fall short in practice.
How long is long enough?
There is no one size fits all answer, but many classic motor trade businesses should be actively considering indemnity periods of 18, 24 or even 36 months, depending on their risk profile.
Factors to weigh up include:
- The complexity and specialism of your operations
- Reliance on skilled labour and bespoke parts
- The level and value of work in progress
- Planning, landlord or listed building constraints
- Exposure to flood, storm or other climate related risks
Choosing the right indemnity period is not about pessimism. It is about realism.
A conversation worth revisiting
Business Interruption cover is designed to protect the future of your business, not just the building it operates from. In a market where disruption lasts longer and recovery is less predictable, reviewing your indemnity period is one of the most effective ways to strengthen resilience.
At Howden, we work closely with classic motor trade clients to stress test recovery assumptions and ensure BI cover reflects how the business would really recover after a loss, not how we hope it would.
If you have not reviewed your indemnity period recently, now is the right time to do so.
How to assess the right Business Interruption indemnity period
When considering your Business Interruption cover, it is important to think beyond best case assumptions and focus on a genuine worst case scenario, such as a major fire at your premises.
To establish what a suitable indemnity period would be for your business, consider the following questions carefully:
- How long would it take for the police and fire service to complete their investigations, and for the insurer to confirm that cover will operate?
- How long would it take for debris to be removed, planning permission to be granted if required, and the premises to be rebuilt or reinstated?
- How long would it take to replace all stock, tools, machinery, plant and contents, and to begin trading again in a meaningful way?
- Finally, how long would it realistically take for the business to return to the same financial position it was in the day before the loss?
If working through these questions suggests your recovery could take longer than expected, it may be time to review your indemnity period. Your Howden Classic Motor Trade adviser can help you sense check your assumptions and ensure your Business Interruption cover reflects the realities of your business.
If you have not reviewed your Business Interruption indemnity period recently, now is a good time to do so. A short conversation can help stress test recovery assumptions and ensure your cover reflects how long your business would really take to recover after a serious loss.
Your Howden Classic Motor Trade adviser can help you work through this and make sure your cover remains fit for purpose. To find out more, call 01252 377 546 or click the 'Find out more' button below to complete a short form, and we will get in touch.