Have you thought about what would happen if your business burned down? There will be stock and equipment to replace, repairs to be made, staff to reorganise and perhaps even customers to refund. With all of this to do, it could take weeks or months before your business is ready to reopen its doors and continue trading. For many small businesses, a lengthy pause in trade can spell bankruptcy. However, there is a way you can protect against interruptions to trade. Business interruption Insurance can help cover your business against loss of profit. In this article, we explain what Business Interruption Insurance is, what it includes, and how to get it.
What is Business Interruption Insurance?
Business Interruption Insurance helps businesses recover from the impact of unforeseen events such as fire by covering loss of gross profit. While other kinds of insurance, such as property insurance, cover insured property that may be damaged, they do not protect your lost income during the period you cannot trade. By providing gross profit, Business Interruption Insurance helps put businesses back in the position they would have been in had the damaging event not occurred.
Do I Really Need Business Interruption Insurance?
While it’s important to consult a small business insurance provider, and find the insurance that is right for your business, Business Interruption Insurance is an important protection for most small businesses. Many small businesses would have to shut their doors if they experienced a major disruption such as a fire or storm. Not only that, 1 in 7 small businesses experienced a shortfall of income because of a business interruption in the past 12 months. As you can see, disruption to trade is a common occurrence, and it’s important to be prepared.
What Does Business Interruption Insurance Cover?
To find out exactly what your Business Interruption Insurance will cover, you’ll need to check the details of your policy. However, here are some common losses that this kind of insurance may protect against:
- Gross Profit: Profits your business would have earned during the time it is closed. This is usually based on your income in previous months.
- Fixed Costs: Operating expenses and overheads that still need to be paid even when the business is not operating. This is usually based on previous monthly costs.
- Disruption: Costs associated with the disruption of services such as power and water.
- Temporary Relocation: The cost of temporarily opening at a different location to continue trade.
How do I get Business Interruption Insurance?
Business Interruption Insurance is usually available as part of a Small Business Insurance Pack, bundled with other insurance essentials such as property insurance, liability insurance, and theft insurance. It’s best to save money by finding an insurance solution that can meet all your needs at the same time.
Insurance issued by Allianz Australia Insurance Limited ABN 15 000 122 850 AFSL 234708 (Allianz). We do not provide advice based on any consideration of your objectives, financial situation, or needs. Terms, conditions, limits and exclusions apply. Before making a decision please consider the product disclosure statement which is available by calling us on 131000.