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 Cyber Insurance? 

With technology being so deeply entwined in businesses, one of the greatest fears of businesses that store and process sensitive customer data is to experience a malicious cyber-attack. Cybercrimes, and threats, keep evolving, and organisations need to be vigilant and continually review and tighten their cyber security management policy and leave no stone unturned when it comes to protecting their digital assets from external threats. 

Cyber insurance is a type of insurance that protects your business against financial losses arising from malicious cybercrime, which can include data breaches, theft, system hacking, ransomware extortion payments and denial of service.  

Why is Cyber Insurance important?

The worst consequence of a cyber-attack is complete interruption of business operations and, furthermore, damage to your business reputation, which can in turn, erode customer trust. Cyber insurance is a necessity to provide coverage for financial loss providing cover for costs associated with investigation, damages and recovery after a cyber incident. A cyber policy with adequate coverage will save you from potential loss and expense to remedy an attack and pay fees, penalties, and settlements to external parties affected. 

What does Cyber Insurance Cover?

Coverage of cyber insurance is in two sections. First-party coverage and third-party coverage. 

First-party liability coverage provides financial assistance to minimise and or mitigate the resultant impact of a data breach or cyber-attack on your business, protecting your data and digital networks. Costs related to a cyber can include cover for:

• Incident response costs 
• Business income loss 
• Data restoration  
• Breach response costs 
• Notification costs 
• Legal defence costs 
• Cyber extortion 
• Regulatory fines and penalties 
• Payment Card Industry (PCI) fines, penalties and assessments 
• Cyber reputational harm 

Third-party cyber liability coverage provides liability coverage for businesses that provide professional services to other businesses for a client's online security that can be compromised by cyber attacks.  Covering costs such as: 

• Payments and settlement costs to consumers affected by the breach
• Losses related to defamation
• Litigation costs and responding to regulatory inquiries
• Government fines and penalties 

Insurance Advisernet can provide cyber risk insurance solutions through our network of insurance brokers who can tailor cover suitable to your needs. Contact an Insurance Advisernet representative today to discuss Cyber insurance. 

Frequently Asked Questions

What is not covered by cyber insurance? 

Some typical exclusions for a cyber insurance claim are the following: 

• A pre-existing breach prior to obtaining the policy
• Cyber-attacks ministered by insiders
• Poor infrastructure that exposes the firm to cybersecurity incidents
• Cost of enhancing the tech system

Is cyber insurance required in New Zealand? 

The Insurance Council of New Zealand (ICNZ) urges businesses to purchase some form of cyber insurance protection in response to the spate of high-profile cyber incidents in recent years. The council emphasised that a Cyber insurance policy should be the last line of defence after due diligence and maintaining stringent cyber security risk management systems. 

Does cyber insurance cover data loss?

Cyber insurance protects businesses and assists with the recovery from a cyber incident which can include data breaches, theft, system hacking, ransomware extortion payments, denial of service and loss of data.  

What are the benefits of cyber insurance?  

Cyber insurance is an absolute necessity to provide coverage for financial loss providing cover for costs associated with investigation, damages and recovery after a cyber incident. The benefits of having a Cyber policy in place with adequate coverage will protect you from potential loss and expense to remedy an attack and pay fees, penalties, and possible settlements to external parties affected.