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Do you have Business Interruption Insurance?

This insurance can save your business from ruin and it can be easily added on to your Office or Shop Insurance, so why do so many companies not have it?

Porject your business operations with "Business Interuption Insurance"

Most companies have their building and contents insured for Fire, Burglary, Storms and accidental damage but unfortunately a lot of these same companies overlook insuring the “business interruption” which these events can cause.

“We can’t work at our office due to storm damage and the repairs that must be done”

“It will take us a while to get up and going again because we had to move”

“We have lost so much business and we won’t be able to pay our bills!


WHAT IS BUSINESS INTERRUPTION INSURANCE?

As the name suggests, Business Interruption Insurance covers the loss of gross profit caused by the interruption of your business from an insured event. It can help you pay ongoing costs of the business and protects profit margins until the business is back on its feet trading again at the same profit level as before the interruption.

The Insurance Council of Australia suggest that up to 70% of businesses fail if they did not insure, or fully insure, for business interruption following a significant loss such as fire or significant storm damage. For something that is a simple addition to even the most standard business policy, these figures are quite confronting.

WHAT ELSE DOES BUSINESS INTERRUPTION INSURANCE COVER?

It can cover such things as wages for business owners, staff as well as ongoing expenses such as leases on equipment. Sometimes even more importantly it can cover for costs incurred to relocate the business (including temporary hire of equipment and rent for additional premises).

HOW LONG CAN I INSURE BUSINESS INTERRUPTION FOR?

The indemnity period needs to be chosen carefully. The indemnity period is the insurance jargon used by insurance companies to refer to the length of time after an insured event the business thinks they might not be able to operate fully, as well as the length of time the business may require financial assistance to meet ongoing financial costs. A business that can relocate and recover quite easily might only need a short indemnity period, however a business that depends on a unique location or special equipment may take longer to get back to full trading capacity. Insurance companies generally tend to offer 3 months to 36 months indemnity periods.

HOW MUCH WILL IT COST?

The premium will increase the longer the indemnity period and the higher the sum insured is. Is it worth the expense? If you want to keep your business running, Yes. You would be surprised how affordable this protection can be. If you can provide the value required, a price can be obtained for you very quickly.

HOW DO I WORK OUT WHAT SUM INSURED I NEED FOR MY BUSINESS INTERRUPTION?

The most comprehensive, safest option is to insure your gross annual income and select an indemnity period suitable for your particular business. Also it is important to consider the additional costs of working that you may require and how “portable” your business is – how quickly could you set up somewhere else and be running to pre-loss levels.

To talk about this in detail, please feel free to contact us and we can help you protect your business and all your hard work.

If you believe that this issue is relevant to your business, please feel free to contact Rebecca Fleming, Manager of our Travel Industry Division at Gow-Gates Insurance Brokers on (02) 8267 9919 or rfleming@gowates.com.au to discuss your circumstances or to obtain a quotation.

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Gow-Gates Insurance Brokers advises that persons should not act on the material contained in this article as the items are of a general nature only and may be misinterpreted. We therefore recommend that advice be sought before acting in these areas.