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. 

What is Property Insurance? 

When you are a business owner,  you will have assets and physical property, which is essential for you to trade. Because your property is an integral part of your business,  you should have protection where a multitude of risks or perils could threaten,  cause damage or cause complete destruction to your business. Property Insurance covers you for loss or damage to your physical business assets, such as building, plant and equipment and stock, in the event of an incident occurring.

Why is Property Insurance Important?

Property insurance (also known as Material Damage) is a name for a policy that provides insurance protection and coverage for business owners and property owners. In the event of damage to property caused by a number of risks such as fire, flood, natural disasters or crime (theft, burglary, or vandalism).  Property insurance can reimburse the costs needed to replace the property. 

What does Property Insurance Cover?

Property insurance can include a number of risk exposures like the following: 

• Fire
• Lightening
• Explosion
• Weather-related losses such as windstorms, hail, snow, ice 
• Burglary/theft
• Flood 
• Natural disasters, such as Earthquake tsunamis, volcanic activity, hydrothermal activity, geothermal activity or subterranean fire

The insurance company will assess the risks associated with owning property in a specific area, neighbourhood, or business district. They conduct a comprehensive analysis of the perils and risks that your property is exposed to.  

If you think your property insurance policy does not cover the specific risk that your property is exposed to, your Financial Adviser is able to canvass the insurance market for a provider that may consider extending your policy for that specific coverage. 

Most Property insurance policies have exclusions that you need to be aware of, for example, widescale extreme events like war and other acts of terrorism. 

At Insurance Advisernet, we can provide property insurance coverage for SMEs. Talk to our expert insurance brokers today and get the best policy that will protect you from major financial loss following an event like damage to or destruction of your property.

Frequently Asked Questions

Which insurance is best for a property? 
Property insurance comes in many forms and can be tailored to a business owner's individual needs. This means depending on the cost, coverage, and preferred insurance provider. Your policy can be different from the policy of another business owner or property owner. Generally, your insurance plan will take into account factors like location, the value of property and assets (actual, repair, and replacement costs), and risks associated with having property or operating a business in that area. 

What is the importance of property insurance? 
SMEs in New Zealand can benefit from the protection that property insurance provides. Property insurance can cover a range of insurable risks and perils for business owners that have a property like a factory, retail store, warehouse, plant and equipment in cases where fire, storm, flood, crime or natural disaster events cause damage and/or destruction to their property. 

What is the difference between homeowners insurance and property insurance in New Zealand? 
Property insurance (also known as Material Damage) is a  term used for business insurance covering the physical assets and physical property of a business. Homeowners insurance is a type of property insurance that is designed for owners of private residential properties. 

What is not covered by property insurance in New Zealand? 
Insurance Policies contain exclusions. These are loss types that are not insured under an insurance contract. Common exclusions that appear in a typical property insurance policy can include intentional damage, neglect of property, rust, rot, mould, general wear and tear or extreme events like nuclear explosions, wars, and other forms of terrorism. To be sure you have the right cover in place, check with your insurance adviser or provider about the specific exclusions in your policy. 

What are the basic types of coverage needed? 
Generally, property insurance shields you and your business from the effects of a broad range of insurable events like fire, lightning, explosions, weather-related losses such as windstorms, hail, snow, ice, flood, burglary or theft, vandalism and natural disasters.