When a cyclone or a flash flood stops you trading, your property policy pays to put the building back. It does not pay for the months you spend not selling anything. That second loss is usually the larger one, and it is the one business interruption cover exists to meet.
What business interruption actually insures
Business interruption insures your gross profit — but not the figure your accountant means by that phrase. In a policy, gross profit is turnover plus closing stock, less opening stock, work in progress and a short list of specified working expenses: the genuinely variable costs you would stop paying if you stopped trading. Everything else, payroll and rent included, stays inside the sum insured. Using the accounting figure instead of the policy definition is the most common way a business ends up underinsured before anything has gone wrong.
Cover runs for an indemnity period you choose, commonly twelve, eighteen or twenty-four months. It begins on the date of the damage, not the date trading stops, and it ends when it ends — whether or not you have recovered by then.
The material damage proviso, and the problem it creates in cyclone season
Business interruption does not stand on its own. Almost every wording contains a material damage proviso: there must be a property policy covering the same interest, and the claim under it must be admitted. No admitted property claim, no interruption claim. Most wordings carve out the one fair exception, where the property claim fails only because the loss falls below the property excess.
That proviso has a sharp edge here. The Mauritian cyclone season runs from 1 November to 15 May, and every warning class is keyed to gusts of 120 km/h: Class I is issued thirty-six to forty-eight hours ahead, Class II allows around twelve hours of daylight, Class III around six, and Class IV is issued once those gusts are being recorded. Under section 32(4) of the Workers’ Rights Act 2019, while a Class III or IV warning is in force a worker may stay away from work and must still be paid at the normal rate.
So a Class III can shut you for two days, oblige you to pay everyone, and cause no physical damage whatsoever — which means no property claim, and therefore no interruption claim. That cost stays with you. Budget for it rather than assuming a policy will absorb it.
Cyclone and flood are standard perils in this market
In Mauritius, cyclone, tempest, tidal wave and flood sit inside the standard fire and allied perils package rather than being bought separately as they often are in Europe. So the question for most local businesses is not whether cyclone damage is covered. It is whether a loss-of-profits policy sits alongside the property policy at all, and whether the sum insured on it is right.
Cyclone Belal made the point in January 2024. A Class III was in force on 15 January, Port Louis flooded, a nationwide curfew ran into the following day and many businesses stayed shut until the Wednesday. Mauritian economists put the production loss at roughly Rs 3 to 4 billion, with around Rs 1.8 billion of that in agriculture. Those were provisional estimates rather than settled figures, but the shape of them is the point: for most affected businesses the trading loss was far larger than the repair bill.
The extensions worth asking about
- Prevention of access — responds when damage by an insured peril to someone else’s property, combined with an order from a public authority, stops you reaching your premises. Usually confined to damage within a radius of about five kilometres. Closing voluntarily does not trigger it.
- Public utilities failure — responds to damage at the supplier’s own installations that cuts your electricity, water or communications. Check whether it stops at a terminal point on your boundary.
- Suppliers and customers extensions — cover damage at a named, or sometimes unnamed, supplier’s or customer’s premises that interrupts your business.
- Increased cost of working — the extra spend that limits the loss. Standard cover carries an economic limit: you cannot spend more than the loss you avoid. Additional increased cost of working removes that limit, for a sub-limit.
- Time excess — non-damage extensions carry a waiting period before they respond. Forty-eight to seventy-two hours is common internationally, rising to around ninety-six hours on catastrophe-exposed property.
What a claim will actually require
Assemble this before you need it. Insurers and their forensic accountants will ask for three to five years of financial statements, MRA income tax and VAT returns, monthly management accounts, general ledgers and accounting data files, customer-level sales history and payroll records. Budgets and forecasts prepared before the loss carry disproportionate weight, because they evidence the trend your business was on. Add the Meteorological Services bulletin history showing which warning class was in force and when, any authority order that closed your area, and CEB outage records if you are claiming a utilities failure.
A policy pays on the numbers you can evidence, not the numbers you can remember.
How we help
We review the property and interruption programme as one thing, test the gross profit calculation against the policy definition rather than the management accounts, and set the indemnity period against how long it would realistically take you to trade back to where you were — not how long the repairs take. Then we place the extensions that match your actual exposure. When a loss happens we notify, assemble the documentation and negotiate the settlement with the insurer. Call us on 5256 5688 or email info@globalequity.mu.
