IF YOU OWN A BUSINESS YOU HAVE TO THINK ABOUT BUSINESS INTERRUPTION INSURANCE

When it comes to running your business, you probably try your best not to play it fast and loose when it comes to managing risk.  If you are not insured for Business Interruption, that might be exactly what you are doing.

While, for the most part, business owners understand the need to insure property, equipment and stock, a distressingly large proportion doesn’t protect their profits.  Where an accidental or malicious damage event occurs, your ability to conduct business could be ‘interrupted’.  In most cases this will affect your profitability significantly.

To give an example if I had my business in a larger complex – say a shopping centre or an office block – and a fire event causes damage, it is quite feasible that I, and indeed my clients and staff, could be prevented from accessing my premises whether they are damaged or not.  This could continue for some time as repair and restoration of the site is completed.

These situations can be disastrous for a smaller or single site business.

How it works

It’s important to understand that Business Interruption is based on a loss of profits.

While your income may stop after an insured ‘event’, your business expenses will almost certainly continue.  The costs that help you keep the doors open.

A small amount of property damage will often cause a significant disruption. It can take many months before you recover. The Business Interruption component of an insurance claim can be greater than the cost of repairing the physical damage.

Here is the imperative – your broker must have the expertise to understand how to convey the vital information of your business to the Insurer – so that you are properly covered should an event occur.

What does it cover?

Business Interruption can cover costs incurred to alleviate the interruption to your business.  This might be the cost of relocating to temporary premises, paying overtime, engaging temporary staff or hiring equipment as you try to get back into business.

It can also pay for advertising to tell your customers you have moved or that you are now ‘back in business’.

Bottom line – it covers costs that are necessary to return your business income to where it was prior to the event

The take-away here is that you need to be working with an adviser that understands how to discern the critical numbers of a small business, and has the knowledge, application and relationship with underwriters to make sure you have everything you need and nothing that you don’t!

Here’s the thing; Insurance in any form is not just about ticking the box and grumbling about the premium.  Your business – even if it is a standard business in an established industry – has a unique range of risks and variables.  Most of you will spend more time planning your next audcasinos holiday than thinking about how to protect the goose that lays the golden eggs.  The protection of your ability to maintain your livelihood is always worth your time.  Make sure your broker knows how to insure businesses, because if he doesn’t you won’t find out till claim time.

If this is news to you, or if you think it might be worth discussing, please let us know, email us at tbib@tbib.com.au or call 07 3252 5254.