Business Interruption Cover

Business Interruption Cover

Do you currently have Business Interruption Cover in your Business Insurance Package? If you do not know already, this is cover for the income that cannot be generated by your Business due to Material Damage occurring at your premises.

 The Insurance Council of Australia estimates 50% of small to medium size businesses cease operating within three years without this cover or enough cover following a fire or other interruptions. But with an appropriate level of Business Interruption Insurance, you would be able to manage this loss and maintain the profitability of your business.

It is not just a fire that can cause interruption to your business. It could be Storm Damage, or other Damages you are covered for. Perhaps the neighbouring building has had the fire or a crime has occurred and you cannot get access to your building for a while. If you have lost access or availability, you would lose the ability to make money.

It protects the income stream to your company. The shortfall in your Gross Profit is covered by Business Interruption Insurance (also known as Consequential Loss or Loss of Profits Insurance) and has the following four main components:

1.  Business Interruption (BI) Cover: Replaces the loss gross earnings (profit) during the shut-down resulting from a covered property loss. The cover can also continue to pay your workforce while you have no work for them.

2. Additional Cost of Working: Cover the cost to relocate to another building and continue operations. During relocation, businesses typically incur the extra expenses of rent, equipment lease and the cost of advertising. All of which are covered by this section of the policy.

3. Claims Preparation Costs: The coverage is optional, but is recommended in the circumstances where you need to hire a professional to help prove your loss.

4. Indemnity Period: This is how long you will continue to be paid from the date of loss. It needs to factor in not only the time to actually rebuild or repair machinery or replenish stock, but also building and repair delays, particularly after a major catastrophe. There can also be delays in obtaining Council approvals or permits. Most Insureds choose only a 12 month indemnity period but that may not be enough.

If you want to discuss this form of cover, contact CPR Insurance Services. Experts who will save you.

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.

Robert Cooper, CPR Insurance Services

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