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Understanding Business Interruption

Zurich Insurance Australia completed a recent research study which determined that less than 40% of small and medium-sized Australian businesses had insurance coverage for business interruption. An even more worrisome statistic showed that a mere 23% of those businesses had ever even heard of business interruption insurance. Such numbers are alarming given the monumental economic losses that can occur from unforeseen business interruption. Have you heard of business interruption insurance?
When the unthinkable happens, companies need business interruption insurance to give them time to get back on their feet and become financially stable. Following a natural disaster, fire, or other incident, there are not only the costs associated with recovery and rebuilding, but there can be a substantial loss of income if business cannot continue as usual. However, business interruption policies can cover a business, protecting against loss of revenue as a result of unforeseen damage which causes business interruption.
 
What Does Business Interruption Cover?
While property insurance protects your business from damages to the physical property, sudden events like fire, flood, or heavy storms can result in your business remaining inoperable for months. During this time, there may be continuing costs for your business, such as rent, utilities, or overhead. Business interruption insurance is designed to protect the financial position of your company. If it takes months to repair damages and reopen for business, this could cost you tremendously. Even once you do reopen, it may be some time before your state of business returns to pre-incident condition. Business interruption coverage is built to help you through all of this and return you to the same financial position you were in prior to the loss.
Businesses that rely heavily on other industries and suppliers may also consider contingent business interruption insurance. This applies only in very specific circumstances, but can cover these businesses against a significant loss or kink in the supply chain which impacts their ability to operate.
 
Understanding Your Policy
While business interruption policies can appear fairly straightforward, the factors surrounding coverage can be highly specific. When damage occurs, your insurer must assess that damage has occurred and determine that it directly results from the unforeseen incident, such as a flood. The process of determining your coverage and sorting your claim is quite complex, and involves careful calculations of your financial position and how a loss will affect you in terms of business interruption.
Policies differ widely in their wording and coverage. Because business interruption claims are so involved and intricate, it is imperative to work with an experienced insurance broker to help you navigate the process. Far too often, business owners find that the complicated and frustrating claims process is costing them additional time and money, or discover too late that they are underinsured or have inadequate or improper cover.

Management Liability insurance is designed to provide protection to both the business and its directors or officers for claims of wrongful acts in the management of the business.

A business insurance pack can provide cover for your business premises and contents, against loss, damage, theft or financial loss from an insured interruption to the business.

Purchase up to six products under one Business Insurance Package. 

Policies differ widely in their wording and coverage. Because business interruption claims are so involved and intricate, it is imperative to work with an experienced insurance broker to help you navigate the process. Far too often, business owners find that the complicated and frustrating claims process is costing them additional time and money, or discover too late that they are underinsured or have inadequate or improper cover.
If you are a business owner, it is paramount that you become educated regarding business interruption insurance. Such a policy could mean the difference between massive financial loss and the continued success of your business. At Macey Insurance Brokers, you can work closely with a professional, qualified broker to understand the needs and risks of your business. Contact us for more information on your options, and start protecting your business today.
General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

All information above has been provided by the author.


Brendan Goddard, Macey Insurance Brokers, ABN 92 003 364 065, AFSL 240 922

This article originally appeared on Macey Insurance Brokers Blog and has been published here with permission.

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