Material Interruption Clause Samples
The Material Interruption clause defines the circumstances under which a significant disruption to business operations, typically caused by unforeseen events such as fire, flood, or equipment failure, is addressed within a contract or insurance policy. This clause outlines the criteria for what constitutes a 'material' interruption, the process for notifying relevant parties, and the remedies or compensation available, such as coverage for lost income or additional expenses incurred during the downtime. Its core practical function is to allocate risk and provide financial protection in the event that a major disruption impedes normal business activities, ensuring both parties understand their rights and obligations in such scenarios.
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Material Interruption. A disruption or break in the continuity of the Group Policyholder’s normal Business operations, which:
Material Interruption a disruption or break in the continuity of the Policyholder’s normal business operations, which:
a. requires the direct involvement of all of the Policyholder’s board of Directors or senior executives and diverts their concentration from their normal operating duties; and
b. is likely to have a significant negative impact on the Policyholder’s revenues, earnings or net worth.