What is Business Interruption Insurance?
If your business suffered an unexpected disruption, such as a fire, flood or storm, or a major supplier closes
because of one of these events, how long would it take to get it up and running again? And how much would you lose along the way?
Business interruption insurance can help make sure your business keeps running smoothly after an unexpected event, by covering the turnover that is lost – so you can recover and rebuild.
Why you should consider it.
For most business owners, there are ongoing expenses that you need to pay even if you’re not generating any revenue – like staff wages, supplier invoices, rent or loan repayments.
Business interruption insurance can get you through a temporary crisis by protecting your cashflow – so you can pay these expenses, and help ensure the future of your business.
“Insurance can help your business get back on its feet if things go wrong. You can insure against disasters and for business disruption to cover your losses during the recovery period.
What can it cover?
Business interruption insurance can cover the loss of any sales you would have made while your business is out of action – plus any extra costs you incur to stay open.
Depending upon the policy, business interruption insurance can cover:
| Type of cover | Potential Benefits |
|---|---|
| Revenue/Income | Income that would have been earned during the period the business cannot operate |
| Fixed Costs | Operating expenses and other costs still bring incurred by the property (based on historical costs) |
| Temporary Relocation | The extra expenses for moving to, and operating from, a temporary location |
| Extra Expenses | Reimbursement for reasonable expenses (beyond the fixed costs) that allow the business to continue operating while the property is being repaired |
| Civil Authority Ingress/Egress | Government-mandated closure of business premises that directly causes loss of revenue such as street closures |
What usually isn’t covered?
Exclusions, the excess you need to pay and limits of liability can vary greatly depending on your insurer. In order to claim under a business interruption policy, the loss has to arise from damage to the property (buildings, stock and contents) which was insured and the damageto the property has to be claimable under that policy.
Business interruption insurance is subject to the same exclusions as those in the policy (ISR or Fire) covering buildings, stock and contents.
Important Note
This information is provided to assist you in understanding the terms, implications and common considerations in business interruption insurance. It does not constitute advice, and is not complete, so please discuss the full details with us over the phone.
As Insurance is a complex subject, please talk to us now for professional advice and to make sure your level of coverage is appropriate, adequate, and sufficient to your requirements.
The List of Risks or the range of insurances available is not exhaustive, if there are any particular risks that are possibly unique to your type of business and/or for any specific or special requirements, please seek our assistance and guidance.