Do I need Business Interruption insurance?
Why do so many small businesses choose to ‘run the gauntlet’ and operate without Business Interruption insurance? Don’t they understand the risk they’re taking?
While most business owners understand the need to cover their property, equipment and stock, many don’t protect their profits. If there’s a fire, burglary or malicious damage, your business could be ‘interrupted’ and your profitability affected – often drastically.
For example, last summer’s disasters, including bushfires and floods caused many instances where business premises where inaccessible, meaning repair crews couldn’t go to work. The lost days of profitability piled up.
It’s situations like these when Business Interruption insurance can be invaluable. It pays to speak to an Adviser to find out if you should have Business Interruption insurance to protect your business.
What is Business Interruption insurance?
Business Interruption covers you for loss of profits. While your income may stop after an insured ‘event’, your business expenses continue.
A small amount of property damage will often cause a significant disruption. It can take many months before you recover. The Business Interruption component of an insurance claim can be greater than the cost of repairing the physical damage.
What does Business Interruption insurance cover?
Business Interruption can cover costs incurred to mitigate the interruption to your business, like the cost of relocating to temporary premises, paying overtime, temporary staff and hiring equipment as you try to get back into business.
It can also pay for advertising to tell your customers you have moved or that you are now ‘back in business’. In other words, it covers costs that are necessary to return your business income to where it was.
Business Interruption can also include events that have an indirect impact on your business. If a fire in another part of a shopping centre prevents customers accessing your shop, Business Interruption cover can be triggered to cover your loss of profits.
And if you need to make a claim, contact your insurance adviser as soon as possible. They will take you through the next steps.
Too many Australian small businesses do not to take out Business Interruption insurance1. Operating without it can be a serious and easily avoidable risk.
About the contributor:
Steve Currie is Resilium Insurance's Regional Manager Qld and NSW. He is one of the advisers CCIQ utilises to offer free, no-obligation strategic advice to members through our Experts on Demand service.