Business Interruption Insurance
Business interruption insurance relates to the financial impact of an insured event, rather than the physical damage itself. It may help with lost gross profit and some additional costs of keeping the business running.
It is usually linked to a property policy. In most cases, the interruption has to result from damage that the property section also covers.
Who this insurance may suit
- Retailers and hospitality venues relying on foot traffic
- Manufacturers dependent on specific machinery
- Businesses with high fixed costs such as rent and wages
- Seasonal businesses with concentrated trading periods
- Businesses relying on a single key supplier or site
Why this cover may be important
Repairing a building or replacing equipment is only part of recovery. Rent, loan repayments and wages often continue while income stops.
Choosing a realistic indemnity period matters. Rebuilding, sourcing equipment and winning back customers can take longer than many owners expect.
Potential areas of cover
Cover varies between insurers and policies. Depending on the policy, cover may include:
Loss of gross profit
Cover may include the reduction in gross profit caused by an insured event, measured against past trading.
Increased cost of working
Reasonable extra costs to keep trading, such as temporary premises or overtime, may be covered.
Wages
Some policies cover ongoing wages for a set period while the business recovers.
Claims preparation costs
Accountants' fees to prepare and support a claim may be included, within a limit.
Extensions
Optional extensions may respond to damage at a supplier's or customer's premises, or loss of access to your site.
Common risks
- Fire or storm forcing premises to close
- Major equipment damage halting production
- Damage to a key supplier's site
- Loss of access due to damage nearby
- Utility outage caused by insured damage
- Lengthy rebuild delays
What may not be covered
Every policy has exclusions, limits and conditions. Some common considerations include:
- Cover is generally triggered by insured physical damage. Downturns in trade and market changes are not covered.
- Disease and pandemic-related closures are commonly excluded or very limited.
- The indemnity period limits how long the policy responds, so a short period may not suit a long recovery.
- Financial figures used to set the sum insured should be kept current.
- Some extensions carry their own sublimits and conditions.
Always read the Product Disclosure Statement and policy wording. Your broker can explain how they apply to you.
Why work with Tasman Insurance Group
- We take time to understand your business or circumstances before discussing cover.
- Where applicable, we approach suitable insurers and compare the options available.
- We explain exclusions, limits and excesses in plain English before you decide.
- We help with changes during the year, renewals and claims.
Business Interruption Insurance FAQs
What is an indemnity period?
It is the maximum time the policy will cover lost income after an insured event. Common choices range from several months to a few years, depending on the business.
Is business interruption the same as income protection?
No. Business interruption relates to the business's income after insured damage. Personal income protection relates to an individual who cannot work because of illness or injury.
How is gross profit worked out for insurance?
Insurers use a definition that may differ from your accounting figures. Your accountant and broker can help you understand how it is calculated for the policy.
Does it cover closures ordered by authorities?
Some policies include limited cover for closures by authorities, often with strict conditions. Disease-related closures are commonly excluded. A broker can talk through your situation.
Related insurance solutions
Business Insurance
A package policy that can bring several types of business cover together, arranged around how your business actually runs.
Learn more about Business InsuranceCommercial Property Insurance
Cover options for commercial buildings, warehouses and premises you own, lease out or occupy.
Learn more about Commercial Property InsuranceCyber Insurance
Cover that may help with response costs, business disruption and liability after a cyber incident or data breach.
Learn more about Cyber Insurance
Ready to talk about business interruption?
Request a quote or call us. We'll ask about your circumstances and discuss the options available.