What is business interruption insurance?
If your business suffered an unexpected disruption, such as a fire, flood or storm, or a major supplier closes because of one of these events, how long would it take to get it up and running again? And how much would you lose along the way?
Business interruption insurance can help make sure your business keeps running smoothly after an unexpected event, by covering the turnover that is lost – so you can recover and rebuild.
Who should consider it?
For most business owners, there are ongoing expenses that you need to pay even if you’re not generating any revenue – like staff wages, supplier invoices, rent or loan repayments.
Business interruption insurance can get you through a temporary crisis by protecting your cashflow – so you can pay these expenses and help ensure the future of your business.
What can it cover?
Business interruption insurance can cover the loss of any sales you would have made while your business is out of action – plus any extra costs you incur to stay open. Depending upon the policy, business interruption insurance can cover:
- Revenue/income – Income that would have been earned during the period the business cannot operate.
- Fixed costs – Operating expenses and other costs still being incurred by the property (based on historical costs).
- Temporary relocation – The extra expenses for moving to, and operating from, a temporary location.
- Extra expenses – Reimbursement for reasonable expenses (beyond the fixed costs) that allow the business to continue operating while the property is being repaired.
- Civil authority ingress/egress – Government-mandated closure of business premises that directly causes loss of revenue such as street closures.