Business Interruption Insurance
Most small business owners like to prepare for unexpected events by insuring their premises, contents or stock. But have you thought about what would happen if you had to shut your doors for a few days, weeks or even months due to an insurable event, like fire, storm or theft?
Would your business survive? How would you continue to pay for things like rent, utilities, staff wages and other business expenses? That’s where Business Interruption cover (sometimes known as Business Income insurance) could help.
What is Business Interruption insurance?
Business Interruption insurance* provides cover for the loss of income and increased costs of operating your business caused by a specified insured event (such as property damage or fire). It’s designed to assist your business to recover from an insured event by paying ongoing expenses (such as wages or rent).
Business Interruption cover is an additional cover option available when you take out a Business Insurance Package.
Did you Know?
When catastrophe strikes, it can be the interference to trading capabilities, and not the event itself, that has the real potential to bring a business to its knees. Business Interruption insurance is designed to provide compensation for the financial impact of insured events and assist your business recovery.
What is typically covered by Business Interruption insurance?
Your Business Interruption policy may provide coverage for:
- Loss of turnover due to damage to your own premises as a result of an insured event
- Additional costs of working
What’s typically not covered by Business Interruption insurance?
Business Interruption insurance does not provide cover for:
- Undocumented income
- Losses due to labour strikes and changes in legislation
- Losses beyond the indemnity period
Who needs Business Interruption insurance?
If your business would be significantly impacted by an insurable event (like a fire or flood), then you may want to consider Business Interruption cover.
Many types of businesses choose to add Business Interruption cover to their Business Insurance Package, including:
- Retail shops
- Cafes and Restaurants
- Tradespeople
- Travel and Tourism
- Manufacturers
- Real Estate Agents
- and many more!
How much does Business Interruption insurance cost?
Like with all business insurance policies, the cost is determined by the unique risk factors of your business. These include things like:
- The number of staff your business employs
- The type of activities your business performs
- The location of your business
- Your business’ annual turnover
- Your claims history
How long does business interruption coverage last?
When taking out a Business Interruption policy in Australia, you will be asked to select an indemnity period, also known as the period of restoration/ liability. This is the maximum period that you can claim from your insurer for disruption to your business.
Typically, you can choose 6-, 12- or 24-months of Business Interruption cover. It’s important to check that there are no waiting periods which may be applicable.
What events could trigger a Business Interruption claim?
There are many types of events that can disrupt your business and require the protection of Business Interruption insurance:
- Storm, hail, lightning, flood
- Busting, leaking, or overflowing pipes
- Burglary or theft
- Glass breakage
- Accidental damage
- Malicious damage
- Fire
Need a real-life scenario?
Watch Eliza Showell’s story† of how a violent storm swept through her Sydney hair salon, Blondies, in 2017. Business Interruption insurance helped save her business by maintaining her cash flow while they were closed for repairs.
Frequently Asked Questions
Why do businesses choose Business Interruption insurance?
Some expenses don’t stop just because you’re unable to work or trade. Consider how much it would cost to continue paying operating costs like employee wages, loan repayments, rent and other bills.
Business Interruption insurance could help you continue to pay these financial obligations until you’re back to business as usual.
Which indemnity period should I choose for my Business Interruption insurance?
Consider how long you could potentially be out of business and still pay your operating costs—think employee wages, loan repayments, and other bills that don’t stop just because you’re unable to trade.
This will help determine the ‘indemnity period’, aka the period of time you wish to insure your business for loss of turnover. Small business owners often underestimate how long it can take to get their business back up and running following a major insured event.
Business Interruption insurance should be just one part of your wider disaster recovery plan – a plan that should include both a broader insurance package and clear guidelines for how your business would react and recover after a disaster.
†The testimonials, statements and opinions presented on this website are representative of individual experiences. Results may vary and may not be representative of the experience of others. We are not responsible for any of the opinions or comments posted on our website. The testimonials are voluntarily provided and are not paid, nor were they provided with free products, services or any benefits in exchange for the testimonials.
The provision of the claims examples are for illustrative purposes only and should not be seen as an indication as to how any potential claim will be assessed or accepted. Coverage for claims on the policy will be determined by the insurer, not BizCover.
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