Prepared by Quinton McCauley, National Technical Manager, Network Insurance Group
This article is part of a series of articles intended to help AFTA Members understand their business insurance needs.
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 safeguard the future of your business.
Did you know?
“Insurance can help your business get back on its feet if things go wrong. You can insure against disasters and for business disruption to cover your losses during the recovery period.” – Department of Innovation, Industry and Science, 2018
It’s estimated that natural disasters cost Australia $11 billion on average each year. – Actuaries Institute, The cost and funding of natural disasters in Australia, 2016
The top two risks to businesses around the world are extreme weather events and natural disasters. – Fortune, ‘Biggest Risks for Businesses in 2018, World Economic Forum,’ 2018
While most companies insure their buildings, stock and contents against disasters like fire, theft and storms, many neglect to insure for the interruption to their business caused by these events.
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:
| Type of cover | Potential benefits |
| 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. |
| Prevention of Access | Prevention of access to your premises due to a material damage event in the vicinity, that directly causes loss of revenue. |
| Suppliers & Customers Premises | Loss of sales due to disruption in supply or demand caused by damage to key supplier or customer premises |
Who can I contact for further advice?
AFTA recently launched a partnership with Network Insurance Group, a leading Australian-owned insurance broker, to provide insurance and risk advice to AFTA members, and reduce members’ insurance costs where possible. Contact Network Insurance Group for a free review of your Business Interruption and other risks today.
Contact Your AFTA Member Insurance Adviser: James Finucane
m: 0407 954 105 | e: afta@networksteadfast.com.au
Important note: This information is provided to assist you in understanding some of the terms, implications and common considerations of Business Interruption Insurance. It is not complete. Contact Network Insurance Group for advice on this cover to ensure it is appropriate to your requirements.