Business Interruption
Business 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.
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What is This Type of Cover?
Business 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?
While your insurance professional can address your unique circumstances, it is often a wise decision for renters or lessees to get insurance cover for property and equipment. If you're unsure about your specific circumstances, contact our expert team today.
Here's An Example:
Hope leases a storefront for her day spa. While she does not own the building, she has a large amount of money invested in all of the equipment needed to serve her customers, as well as the items that make her spa stand out from the competition.Suppose a fire destroys the building. Most, if not all, of Hope’s equipment and decorative items will also be lost. If she does not have the necessary cover, Hope will experience a tremendous financial loss. The loss could be significant enough to force her to close her business permanently.However, if Hope has insurance that covers the property and equipment, she will be able to replace the things needed to operate her business.
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:
- The biggest risks to businesses across the globe are natural disasters and extreme weather events.
- Each year, natural disasters cost Australians 11 billion dollars.
- 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
- Revenue
- Temporary Relocation
- Fixed Costs
- Extra Expenses
- Civil Authority Ingress / Egress
POTENTIAL BENEFITS
- Revenue lost during the period of time your business is not open
- Costs of temporarily moving your business so you can maintain operations
- Fixed costs of business based on past costs
- Payment for extra costs necessary to keep your business operating. These figures are beyond the payment for the fixed costs of business
- 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.
Safe Work Australia, Key Work Health Safety Statistics 2014
"Penalties awarded against companies and its directors or officers for work health safety breaches have increased by 43% to $22.3 million in one year. Penalties now average $62,000 per company."
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Did You Know?
Many businesses think it won't happen to them, but statistics show otherwise. In fact:
(Chubb 2016 Private Company Risk Survey)
The likelihood of a claim that could be covered by a Management Liability policy has tripled in the last five years, with 50% of notifications resulting in a claim.
Chubb 2016 Private Company Risk Survey
The most common claims are for employment practices like bullying, harassment and wrongful dismissal.
Chub, 2016 Private Company Risk Survey
Major claims by amount relate to crime - including employee fraud.
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:
- The biggest risks to businesses across the globe are natural disasters and extreme weather events.
- Each year, natural disasters cost Australians 11 billion dollars.
- 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
- Revenue
- Temporary Relocation
- Fixed Costs
- Extra Expenses
- Civil Authority Ingress / Egress
POTENTIAL BENEFITS
- Revenue lost during the period of time your business is not open
- Costs of temporarily moving your business so you can maintain operations
- Fixed costs of business based on past costs
- Payment for extra costs necessary to keep your business operating. These figures are beyond the payment for the fixed costs of business
- 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.
