Business Interruption

Business Interruption (BI) insurance provides coverage for financial losses incurred due to a claimable event under the OAR insurance causing the offshore wind farm to stop production of electricity for the period of time needed to repair the damage.

Those financial losses can represent both additional costs incurred as a result of the stoppage, as well as monies not earned as a result of the stoppage. To the extent that the offshore windfarm is scheduled to sell the electricity produced at prices impacted by the market, it is possible that a similar duration of non-production may arise in a more sizeable claim if suffered in the winter time, than if suffered in the summer time when electricity prices tend to be lower.  

Operational phase

BI insurance has many similarities to DSU insurance, except that it is in place during the operational phase of the offshore wind farm’s life cycle, rather than whilst the wind farm is being constructed. In many jurisdictions during operations, the transmission assets linking the offshore wind farm to the onshore grid will be owned and operated by another party, and therefore similar to Contingent DSU, Contingent BI will also provide BI coverage for financial losses incurred due to inability to deliver and sell the electricity produced due to a physical damage on those transmission assets owned by others, amongst other potential triggers not related to a claimable event on the OAR insurance.

Also similar to DSU insurance, BI insurance can likewise be vulnerable to the seasonality of market electricity prices. And because the only thing the insurer can do is to try to get the damaged assets back to producing electricity as quickly as possible, the availability of spares, repair/reconstruction facilities, available nearby vessel tonnage, and lead time to reconstruction of required replacement components all has a similar impact on BI claims as they do on DSU claims.