Do I Need Business Interruption Insurance?

As a small business owner, you’ve probably got an adequate level of business insurance to protect the equipment you use, loss in terms of theft, and damage as a result of fire or other natural disaster. But have you considered business interruption insurance? Too many small business owners fail to think about how they would manage if their business couldn’t operate temporarily resulting from a disaster.

Business interruption insurance, often referred to as business income insurance, covers you in the event you suffer an interruption or interference to your business following an insured event which results in a reduction in gross profit. An example of this may be a furniture manufacturing business suffering damage caused by fire. The business not only suffers a material damage loss to contents and equipment (covered in general business insurance), but also suffers a large financial loss due to a reduction in trade. In many cases, this loss can exceed the initial material or physical loss. This is where business interruption insurance comes in.

Business interruption insurance is made up of several key elements such as;

• The indemnity period
• The sum insured
• Increased costs of working

The key focus of this blog is around the indemnity period. The indemnity period is the period of time that a business is interrupted. The indemnity period commences from the date the insured event has taken place through to when the business is back up and running to the same level is was prior to the loss or the indemnity period on your insurance policy expires.

When discussing the indemnity period with your broker, the following points are crucial to ensuring you are adequately covered;

• Dependency on the premises and or location
• The availability of another premises that suits your businesses requirements
• The availability of machinery and equipment to replace the damage items

The above points can have big impacts on the time it may take to get the business back up and running to the same level it was prior to the loss. It’s important to consider these when choosing a business insurance package that suits your needs. Unsure what you’re covered for? Contact the insurance brokers at Carbon Group for a confidential chat. Call us on (08) 9446 8588.

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