Insurance Policies: a Useful Guide

3 Considerations To Plan For Business Interruption Insurance

Are you experiencing floods, bushfires, storms or pandemics? While rare, these situations can occur and can affect your small business if you're not protected. Business interruption insurance is designed to cover vital costs while your business is closed or out of action. Here are some ways to help you plan for business interruption insurance:

What Is Included And Excluded In Your Insurance Policy?

It's important to understand what your business interruption insurance includes and excludes. For example, are natural disasters like floods, storms and bushfires covered? Are pandemics covered? While natural disasters may be covered, many insurance companies do not cover for pandemics and quarantinable diseases because of the sheer uncertainty around their impact. It's important to consider as many risks to your business as possible so you can find something that provides you with the best possible coverage without hurting your pockets.

What Expenses Does The Business Interruption Policy Cover?

You'll also want to know exactly what expenses your business interruption policy covers. This may include expenses to operate the business, such as rent, electricity and staff wages. If you have to relocate to a temporary location elsewhere, does the policy cover for the expenses of relocating. If you need to use replacement machinery, does the policy cover these expenses? You may also need to pay your staff and suppliers during this time, so you may want to make sure that your policy covers all these expenses. Get the big picture of your expenses and determine the most critical areas to be covered. 

How Much Business Interruption Insurance Coverage Do You Need?

The amount of coverage you need will depend on the nature of your business, the number of employees on your payroll, your assets and liabilities, how much time your business may need to resume operations and so much more. For example, if you run a small shop within a shopping complex, you may need a shorter time to resume operations after a catastrophe. But if you have to re-build an office after a fire or storm, this may take you a lot longer, and you may need to have a higher level of cover. There is no one-size-fits-all solution here, so you will need to speak to different insurance companies or brokers to determine the right solutions for your particular needs.

Business interruption insurance could be the solution you need to avoid closing down completely in the event of a natural disaster or catastrophic event. A business insurance professional can help you find a solution for your business.