Do You Need Business Interruption Insurance?

What is This Type of Cover?

Business interruption insurance can help in unforeseen circumstancesBusiness interruption insurance will protect your company in the event of an unforeseen issue that makes running your business impossible. Situations such as an essential supplier closing its doors, floods, storm damage, or fires can halt your business and keep you down for extended periods of time.

As a business owner, you likely have the mindset to prepare for the unexpected. However, in some instances, your preparation may not be up to the necessary level.

These are the situations where our insurance cover can save your business.

How Do I Know if I Need Business Interruption Insurance?

Essentially, most businesses would benefit from a business interruption policy. If you need to pay fixed costs such as rent, utilities, wages, or loans, this type of cover can help your business survive. Because you still have cash available, you can keep your expenses current and stay afloat until you can resume your regular business activities.

Important Information You Should Know

Here are three key facts about interruptions to businesses:

  1. The biggest risks to businesses across the globe are natural disasters and extreme weather events.
  2. Each year, natural disasters cost Australians 11 billion dollars.
  3. The majority of Australian businesses have insurance cover for the contents of their business and their buildings that will safeguard them from weather disasters, theft, or fire. However, many of these companies lack business interruption insurance.

What Will My Policy Cover?

Not every insurance policy has the same details so you should get a clear explanation of your terms. Generally speaking, your business interruption insurance will pay out for extra costs to keep your business running or the amount of money you could not earn because your business closed.

 

Most Business Interruption Policies Will Cover

TYPE OF COVER
POTENTIAL BENEFITS
Revenue/IncomeRevenue
Revenue lost during the period of time your business is not open
Temporary RelocationTemporary Relocation
Costs of temporarily moving your business so you can maintain operations
Fixed CostsFixed Costs
Fixed costs of business based on past costs
Extra ExpensesExtra Expenses
Payment for extra costs necessary to keep your business operating. These figures are beyond the payment for the fixed costs of business
Civil Authority Ingress / EgressCivil Authority Ingress / Egress
Closure of your business because of a government directive

 

Exclusions to a Business Interruption Policy

  • The policy’s limits of liability
  • Property not covered under this policy
  • Any exclusions found in your policy

A Case Study

A small print shop with several employees is unable to operate because the restaurant next door caught fire and destroyed the print shop along with all of the contents. A period of time will pass as the building undergoes repairs. Additionally, all of the print shop supplies need replacing.

Because the print shop owner carried business interruption insurance, the funds needed to pay employees and other fixed costs of business is available.

Please note this information is for educational purposes only and does not constitute complete advice and will not replace the guidance of a trained professional.