Waiting period
An initial period after a loss during which the cover does not yet pay, the time equivalent of a deductible, common in business interruption.
The waiting period runs from the loss. During that time the cover does not yet respond, and the insured bears the consequences alone. It is a deductible expressed in time rather than money. It shows up mainly in business interruption cover, as a number of hours or days of downtime before indemnification starts. It does two things. It screens out short, frequent interruptions that would cost more to handle than to pay. And it leaves the first phase with the insured, often the phase that good preparation does the most to control. In cyber, it is an important underwriting parameter for business interruption following an outage. An eight- or twelve-hour waiting period excludes micro-outages and still covers significant stoppages. Setting it is a trade-off between breadth of cover and premium: a longer period lowers the premium but leaves the insured exposed to mid-length interruptions.
Textbook case: a cyber policy has a twelve-hour waiting period on business interruption. An eight-hour outage pays nothing. A three-day stoppage is covered beyond the first twelve hours.
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