As a small to medium sized business owner, your company is your livelihood. In the event of an accident, storm, fire or other disruptive circumstance, your income may stop, but your business expenses will continue. Business Interruption insurance can help you put your business back in the same trading position it was in before the event occurred.
What is Business Interruption Insurance?
Business Interruption Insurance covers you for loss of profits while your business is out of action. It is designed to protect your business for loss of income or expenditures sustained as a result of direct loss, damage, or destruction to your insured property.
Business Interruption Insurance can help your company survive the unexpected, with minimum losses.
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The Importance of Business Interruption Insurance
Businesses that choose to do without Business Interruption insurance often don’t realise the implications and the risk they’re taking on. Being temporarily out of action can have a crippling financial impact on the business, which can be extremely difficult to recover from.
What Risks May a Business Interruption Policy Cover?
As well as lost income, Business Interruption can cover the increased cost of working as a result of the accident or event that has impacted your business.
Put simply, in the event of damage to your property or assets, Business Interruption insurance covers you for costs you wouldn’t normally incur but that are necessary to get your business back in order. Some examples of situations that Business Interruption may cover are:
- A small accounting firm’s office is destroyed by fire. The owner has to pay rent in temporary accommodation to house the staff while repairs are carried out on their premises. Business Interruption cover could reimburse the business owner for the cost of rent.
- An electronics shop has been affected by flood and employees have had to work extra hours to clean the store and sort through stock. The shop owner therefor has to pay these employees overtime to get the store back up and running, which can be covered by Business Interruption insurance.
- A retail store within a shopping centre cannot be accessed by customers as a result of a fire in another part of the centre. Although the fire didn’t directly affect this shop, a Business Interruption policy may cover the indirect impact.
- A restaurant’s kitchen has been destroyed by storms. To get back up and running, the owner has had to hire in extra equipment as well as additional temporary staff. Business Interruption insurance can cover these expenses.
- A pet store has had to close for a short time and relocate as a result of an accident at their property. They need to make their customers aware of the changes to their business using poster advertising. Business Interruption Insurance can cover advertising costs to tell their customers that they’ve moved and are now ‘back in business’.
While Business Interruption is very common in larger Australian companies, the majority of small businesses will decide not to take out this type of insurance. Operating without Business Interruption insurance is a serious risk.
As a business owner, the continuing success of your business is dependant upon your ability to manage, mitigate and transfer risks. Business Interruption costs are typically difficult to predict and to evaluate. It is therefore imperative to back up your prevention strategies with a comprehensive insurance policy that can fully protect your business, employees and the general public.
What Are the Key Things That May Be Covered By a Business Interruption Insurance Policy?
Coverage will differ from policy to policy, but below is an outline of the features commonly covered by Business Interruption insurance:
- Profits: Profits that would have been earned during the period of interruption.
- Fixed Costs:
- Operating expenses and other costs still being incurred by the business while it is out of service, such as rent, payroll and other bills.
- Temporary Location:
- Some policies cover the extra expenses of moving to, and operating from, a temporary location.
- Disruption: Disruption caused by service providers including power, telecommunications & water.
- Extra Expenses: Business Interruption may reimburse reasonable expenses, beyond fixed costs, that allow the business to continue to operate while the property is being repaired.
Who Needs Business Interruption Insurance?
Most businesses will not operate without property insurance to safeguard their business assets and premises. However in the event of serious property damage, it’s not uncommon for the Business Interruption component of an insurance claim to be greater than the cost of repairing the physical property damage.
Australian businesses across industries can benefit from Business Interruption insurance, as the costs incurred as a result of interrupted trading can accumulate quickly. From the smallest amount of property damage, significant disruption can easily occur, turning your profitable business into one that’s operating in the red. What’s more, it can be many months before you’re profitable again.
How PSC Direct Works for You
As specialist small business insurance brokers, PSC Direct uses our considerable experience to provide multiple quotes for you. Combining our expertise insuring thousands of other similar businesses with our detailed database of insurers and insurance products; we’re best placed to advise you on the right insurance for your business.
We have strong relationships with the leading underwriting agencies and insurance companies. We can source the most appropriate business insurance policy for you, covering you for what you really need, at the right price.
We can help sole practitioners, small, medium and large businesses protect the businesses you are growing and ensure your assets are covered in the event that disaster strikes.
With our strong relationships to a broad range of highly-rated insurers we are able to advise you on business insurance, professional indemnity insurance, and public liability insurance specifically tailored to meet the risk exposure of your business.
We can also provide advice on a range of additional insurance policies and cover that can affect your business and make sure you have the right insurance at the right price.
- 72% of Australian businesses fail after experiencing a major loss.
The right business insurance will ensure you are not one of them.
While good insurance covers you for most things – Professional Indemnity, Professional Liability and Property, great insurance covers you for the specific risks that your business faces. We understand that every business is unique and you need a policy that addresses the specifics. We make sure that when you have a claim that’s out of the ordinary and complicated, you’re covered.