Business Interruption insurance is an insurance product that all business owners should consider. It is income protection for your business, protecting from financial loss following property damage. As you can imagine the ongoing financial loss often has far greater impact on a business than the property damage that led to the financial loss.
While most businesses insure for property damage it is believed that only 30% of Australia’s 1.3 million SME businesses have appropriate Business Interruption insurance. After significant property damage most businesses without Business Interruption insurance fail to reopen their doors.
This short 2 minute video from Know Risk provides an excellent overview of Business Interruption insurance.
Business Interruption provides continuity of income following loss or damage to business property. It will pay for your loss of business income regardless of whether your business is closed or just partly impacted by the property damage. The cover can also pay for additional costs you might incur to minimise the effects of closure or downturn as well as any impact on your net profit.
The majority of claims arise because of damage to your own property however a significant amount (around 30%) arise because of dependencies away from the premises known as an indirect impact. This could be damage at a public utilities premises (gas, electricity, water, and internet) or a key supplier.
Another frequent example of indirect impact is Prevention of Access. An example of Prevention of Access can be where a business in a shopping centre has significant damage which results in the closure of all or part of the shopping centre. The closure of the shopping centre prevents access to other businesses even though there was no physical damage to their property and as a result those businesses suffer a financial loss as their customers can not gain access to their premises. Read about a recent example of one of our clients who suffered significant financial loss as a result of this type of event here –
Part 1: https://www.mycafeinsurance.com.au/case-studies/fire-damage-no-obstacle-with-the-right-insurance-part-1/
Part 2: https://www.mycafeinsurance.com.au/case-studies/fire-damage-no-obstacle-with-the-right-insurance-part-2/
An emerging risk that can potentially cause significant financial damage to businesses is the threat of cyber-attacks. These attacks are becoming more and more sophisticated as hackers chase bigger rewards. The potential damage to businesses is large and according to one of the main global insurers Zurich, around 50% of businesses that lose data in a cyber-attack will cease trading within 6 months. Insurance products for cyber-attacks are still fairly new and are evolving but cover is available and can include financial loss to the business.
Please consider Business Interruption insurance for your business it may even help you sleep a little better at night knowing your business is protected for more than just physical damage.
Business Interruption insurance is reasonably complicated and needs to be tailored to your industry and specific business needs so do get advice when considering this insurance.
Bruce Insurance can provide a free analysis of your business interruption requirements including a detailed financial analysis to ensure the insurance is set up appropriately.