Business Interruption Insurance
What is Business Interruption insurance?
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.
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).
What you should consider?
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?
- Insure your gross annual income and select an indemnity period suitable for your business
- Consider additional costs of working and how portable your business is
Did you know?
New Zealand incurred $266,340,393 in material damage and business interruption claims in 2017.
(Insurance Council of New Zealand, Understanding Insurance, 2018)
Insured New Zealand businesses have claimed $120 million over 10 years to 2018 as a result of damages from floods.
(New Zealand Climate Change Research Institute, Estimating financial costs of climate change in New Zealand, 2018)
Types of Business Interruption Insurance Covers
Property damage cover
This covers the financial costs of a temporary shutdown, rather than the material costs. Commercial property insurance typically covers property damage, and it's included in a business owner's policy.
Ship repairer's liability
This cover is designed for businesses that won't lose revenue following an insured loss but will incur additional costs to continue operating. This may include relocation expenses, overtime for staff, redirecting phones and internet, and advertising the change of address to customers.
Traditional cover
This includes Consequential Loss of Profits (ISR policy), Gross Profit, Annual Gross Profit, Annual Income, or Gross Income.
What can it cover?
Some of the benefits of a Business Interruption insurance policy may include:
| Coverage Type | Description |
|---|---|
| Fixed costs | Covers operating expenses and other costs still being incurred by the property (based on historical costs). |
| Civil authority ingress/egress | Covers the government-mandated closure of business premises that directly causes loss of revenue such as street closures. |
| Revenue/income | Covers the revenue/income that would have been earned during the period the business cannot operate. |
| Extra expenses | Reimburses for reasonable expenses (beyond the fixed costs) that allow the business to continue operating while the property is being repaired. |
What is usually not covered?
CASE STUDY
Cara, a bakery shop owner from Invercargill, experienced an unexpected power outage one night that caused damage to their ovens. Luckily, with the help of business interruption insurance, the cost of repairs and replacements were fully covered, allowing Cara to quickly get back to serving their customers without any major financial setback.
In addition to covering the cost of repairs and replacements, business interruption insurance can also provide financial support for the loss of income and ongoing expenses that occur during the interruption period. For Cara, this meant that they were able to keep their bakery running smoothly and maintain their loyal customer base, even during a difficult and unexpected event. Having the right insurance coverage in place can make all the difference in keeping a business afloat during challenging times.
Why choose FG Insurance?
- Peace of Mind at Affordable Rates
- Flexible Plans
- 24/7 Roadside Assistance
- Fast and Simple Claim Service
- Modern Policy Wordings
- Competitive Pricing