What is Business Interruption Insurance? 

For business owners, one of the greatest risks is when business operations are affected by loss, damage or a disaster. A temporary cessation of business trading can affect you financially. If the business interruption is caused by insured events, which lead to loss, damage or destruction of property, you will be unable to trade and earn an income.  Business Interruption insurance is designed to protect you from financial loss caused by an insured event or incident that halts the business operations. Business interruption insurance helps return your business to the same financial position it was in prior to the event or incident. 

Why is Business Interruption Insurance Important?

Owning a business is a risky undertaking. Purchasing business interruption insurance can save you from the debilitating costs of recurring payables if your business has to temporarily stop producing goods or is unable to trade. It ensures that your business has a reliable financial stream of income when you have to pay expenses like rent, payroll, overhead costs, and contractual obligations with suppliers and vendors. Business interruption assists to place you back in the same position you were in prior to the event or incident. 

What does Business Interruption Insurance Cover?  

An interruption to your business can be caused by a number of insured risks or perils. Examples of this are when your business is affected by the devastating effects of flooding, earthquake, fire, burglary or theft and weather-related losses. 

Interruption to your business operations leads to lost income and profits. Business Interruption Insurance covers you for loss of profits or loss of rental income if you own a commercial building. It covers additional increased operating expenses that are incurred during a period of disruption, such as moving to new premises to continue trading. It also provides cover for professional expenses incurred, such as an accountant fee to prepare and present a claim evidencing loss of income to your insurance company. 

Make sure that you have a dependable insurance solutions provider that will help you in case of an unexpected business interruption. Schedule an appointment with us at Insurance Advisernet! 

Frequently Asked Questions 

What is included in business interruption insurance? 
Business interruption insurance can provide coverage against costs as a result of the disruption to business operations, like: 

• Loss of gross profit
• Loss or gross revenue  
• Loss of gross rental income 
• Wages / Payroll
• Additional increased costs incurred during a disruption
• Claims preparation costs 

Business Interruption policies can also extend to provide limited cover for other events, such as interruption or interference to the business resulting from the closure of transport routes or closure by an authorised body, preventing access to the premises. Or where your key supplier or customer suffers interruption or interference. 

What are the benefits of business interruption insurance? 
The primary benefit of business interruption insurance is to protect the business from financial loss caused by an insured event or incident that halts the business operation. Business interruption insurance helps return your business to the same financial position it was in prior to the event or incident. A business interruption policy provides temporary financial relief while the business is rehabilitating itself. 

What are the most common causes of business interruption? 
A business interruption claim can be triggered by a number of insured perils that cause disruption to business operations, including, but not limited to: 

• Natural disasters / Acts of God 
• Damage to property (e.g., fire or explosion)
• Burglary and vandalism
• Flood 
• and other weather-related losses

How is business interruption calculated?
A business interruption loss calculation is a formula based and best actioned by an accountant to establish the financial loss from a claimable event. It considers the financial impact and loss of revenue that would have been earned but for the loss occurring. This is determined from the financial records and previous trends of the business.