People often assume Business Interruption (BI) cover is broad, but in practice, it usually responds in a very specific way. And this is why it causes so much confusion…

The biggest misconception? That BI is a standalone cover for “any time the business can’t trade.” It isn’t.

For most escape room operators, BI cover sits behind your property insurance and is triggered by the same insured event. In insurance speak, this is often called a material damage proviso – meaning there typically needs to be a valid claim under the property section before BI responds.

So, if a fire damages your control room and you have to shut for eight weeks while repairs happen, that’s potentially a BI claim. If bookings collapse because a road diversion makes you harder to find, probably not – unless a policy extension applies…

Let’s unpack that further in this blog.

It starts with the insured peril

BI generally follows the “perils” insured under the property section. Common examples include:

• Fire
• Escape of water
• Storm or flood
• Theft or malicious damage
• Impact (say, a vehicle through your shopfront)
• Sometimes accidental damage, depending on cover

For an escape room, that could mean:

Fire in a game room
A fire causes smoke damage to props, electronics and décor. You close for repairs. Property cover pays for reinstatement. BI could cover lost income during the closure.

Burst pipe ruins a set
Water damages themed scenery and control systems. If the property damage is insured, BI could respond for the downtime.

Flood affects your premises
Even if the building survives structurally, unusable rooms can trigger both property and BI elements.

Importantly, BI doesn’t usually respond to uninsured damage. If the property claim fails because of an exclusion or underinsurance problem, the BI claim may fail too.

What does BI actually pay for?

This is where cover can vary…

Loss of Revenue/Gross Profit
Designed to protect lost income following an insured interruption. For many escape rooms, this is the big one, and usually the most appropriate cover.

Increased Cost of Working (ICOW)
This covers extra costs incurred to reduce the loss. For example:

• Hiring temporary premises for pop-up games
• Renting replacement props or tech
• Extra marketing spend to win customers back
• Paying overtime to rebuild and reopen faster

The golden rule? Those extra costs usually need to be economical. In other words, they need to be cheaper than the loss they prevent.

Don’t overlook the indemnity period

One of the most underappreciated parts of BI, the indemnity period is the maximum period your BI cover can pay for. This is usually 12 months, but sometimes longer, even up to 36 months. And it’s not just “until the builders leave”. It’s until the business results recover, or the indemnity period ends.

For an escape room, rebuilding a room might take three months. Recovering lost bookings, restoring reviews momentum and getting occupancy back to normal could take much longer.

Where extensions can make BI much broader

This is where things get interesting. Many policies include extensions that may respond even when your own premises hasn’t suffered direct damage, such as:

Denial of Access
Think police cordon after a serious assault, or a structural collapse next door stopping customers reaching you.

Utilities Failure
A power outage at a substation shuts your venue for days.

Supplier Extensions
A specialist puzzle fabricator suffers a fire, delaying a new room launch.

Public Utilities/Telecoms
Loss of internet or systems can be particularly painful for tech-heavy venues.

Some policies also include non-damage extensions, though these vary hugely in wording.

Watch for “time franchises”

Some extension claims don’t start paying from hour one. They may have a time franchise, which is effectively a waiting period. For example…

Your utilities extension has a 24-hour franchise:

• Power fails for 12 hours → no claim.
• Power fails for 48 hours → policy can respond from the time of the outage, so not just for the time after the first 24 hours.

It’s a bit like an excess, but measured in time rather than money. This can catch people out.

When BI may not respond

Common examples include:

• General downturn in bookings
• Equipment breakdown isn’t insured under property
• Voluntary closure
• Poor reviews or reputational damage
• Pandemic-type events unless specifically covered
• Interruptions shorter than a time franchise under an extension

In other words, BI is powerful, but not limitless!

The main takeaway

Business Interruption cover is less “income insurance for anything bad” and more “financial recovery cover following insured disruption.” For escape rooms, that distinction matters.

The real value often lies not just in the core BI cover, but in the extensions, the indemnity period and making sure sums insured reflect how long recovery would actually take. Because after a major loss, rebuilding the room is often the easy bit. Rebuilding the business is what BI is really there for.

As independent insurance specialists in the entertainment sector, we can help you identify potential gaps in your cover, find the missing links and crack the code on cover that fits your unique needs. Get in touch with our team today to find out more.

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