October 2025 — As the anaerobic digestion (AD) sector in the UK continues to expand its role in renewable energy and sustainable waste management, plant operators face critical decisions regarding Business Interruption (BI) insurance. Selecting the appropriate basis of cover and correctly determining the indemnity period length are vital to ensuring financial protection against operational disruptions.
The indemnity period is the length of time during which business interruption insurance losses are covered following an insured event. For anaerobic digestion plants operating within the renewable energy industry, this period can be extensive. This is due to the complexity of repairs, regulatory approvals, and commissioning processes. Potential physical damage and material damage to the business premises can also be included.
Marsh recommends a minimum indemnity period of 24 months for UK anaerobic digestion plants. We base this on our extensive sector experience and knowledge of potential risks in the renewable energy insurance market. 24 months reflects the realistic timeframe often required to restore full business operations. It takes into consideration:
While 24 months is the baseline, Marsh recognises that each plant’s circumstances are unique. Through detailed conversations and risk assessments, Marsh Risk Partners work closely with operators to tailor the indemnity period to suit the specific risk profile, operational complexity, and contractual obligations of each plant. This tailored approach ensures that you get the right level of cover so you can avoid unnecessary premium costs. It also takes into consideration other factors that may cause your site to close temporarily, such as:
By engaging with insurers early and leveraging Marsh McLennan’s expertise, anaerobic digestion plants can secure a range of cover options that provide protection against exclusions and risks unique to the sector. This ensures your plant's resilience and continuity in the face of disruption.
Gross Revenue basis covers the total revenue the plant would have earned during the 24-month indemnity period if uninterrupted.
Assuming annual gross revenue of £2,400,000:
This means the insurer would provide cover up to £4.8 million in lost revenue over two years if the plant is unable to operate.
Gross Profit basis indemnifies the loss of profit by subtracting variable costs from gross revenue over the indemnity period.
Using the same plant with annual gross revenue of £2,400,000 and annual variable costs of £1,440,000:
This reflects the actual profit lost over two years due to interruption.
Fixed Cost basis covers costs that vary directly with output or sales revenue but continue to be incurred during the interruption. This includes purchases (net of discounts), bad debts, EBITDA, and internal recharges (excluding central services expenses).
Assuming annual fixed costs as follows:
Calculating over 24 months:
This amount covers ongoing essential costs that must be paid even if the plant is not operational.
Navigating the complexities of BI insurance for anaerobic digestion plants requires expert guidance. A Marsh Risk Partner can provide invaluable support throughout this process by:
By partnering with Marsh, anaerobic digestion operators gain access to deep sector expertise, advanced modelling tools, and a global network of insurance markets. This has helped to optimise BI coverage and protect business continuity for anaerobic digestion operators in recent years.
Renewable Energy Account Executive
With a wide range of experience in the insurance industry, Joe started his career in commercial insurance and joined Marsh Commercial’s renewable energy team in 2019. Joe has built up a wealth of experience across all renewable energy technologies and is instrumental in assisting clients, from those involved in the supply chain through to funders and developers.
| Basis | Annual Amount (£) | Monthly Amount (£) | Indemnity Period (months) | Indemnity Amount (£) |
|---|---|---|---|---|
| Basis | Annual Amount (£) | Monthly Amount (£) | Indemnity Period (months) | Indemnity Amount (£) |
| Gross Revenue | 2,400,000 | 200,000 | 24 | 4,800,000 |
| Gross Profit | 960,000 | 80,000 | 24 | 1,920,000 |
| Fixed Cost | 600,000 | 50,000 | 24 | 1,200,000 |
For UK anaerobic digestion plants, selecting the correct BI coverage basis and accurately defining the indemnity period are critical to effective risk management. While Gross Revenue basis offers broad coverage, Gross Profit basis provides a more precise reflection of lost profitability. Fixed Cost basis safeguards essential ongoing expenses.
We recommend a 24-month indemnity period as a minimum to realistically cover the extended downtime risks inherent in AD plant operations. However, through detailed risk assessment and consultation, Marsh Risk Partners can tailor this period to suit each plant’s individual risk profile. This ensures neither underinsurance nor excessive premium costs.
Operators should collaborate closely with Marsh Risk Partners to tailor BI policies that reflect their unique operational and financial circumstances. This helps to ensure robust protection and business continuity. This collaboration also helps clarify the roles of all parties involved and ensures compliance with applicable law throughout the insurance project.
