Most business owners understand the importance of business insurance when it comes to repairing damage or replacing equipment. However, natural disasters and vandalism can not only harm your business, but can make it almost impossible to get back to normal operations – often for an extended period of time.
The owners, shareholders, and other financiers of your business expect an ongoing income in order to cover financing costs, business operation costs, and an acceptable level of profit. As such, profit and ongoing expenses including payroll, management and financing costs should be insured. The type of insurance that covers these kind of events is called Business Interruption Insurance.
Without Business Interruption Insurance, your company may not survive in the event of a loss, however:
Three out of every four businesses don’t have business interruption insurance.
Having protection in place to keep your operation financially stable in the event that it is unable to resume business as usual is vital. A recent report published by CGU further highlighted the importance of Business Interruption Insurance in a recent campaign with the following statistics:
- 1 in 4 small businesses would not survive if they had to close their doors for 3 months
- 38% of small businesses would shut down if they experienced a business interruption during a busy period in the year
- 1 in 7 businesses experienced a shortfall in income because of a business interruption in the last 12 months
The campaign aimed to educate CGU staff and brokers about Business Interruption Insurance with a series of informational webinars. The webinar series focused on why business owners need Business Interruption Insurance and the most common Business Interruption Incidents.
Why Business Owners Need Business Interruption Insurance?
Business Interruption insurance is designed to protect the money or income you may lose when your business operations are interrupted and you are unable to operate as normal. This can be as a result of a natural disaster, or even something simple like a power outage.
The following Infographic from CGU explains in a bit more detail the benefits of securing a comprehensive Business Interruption Insurance policy.
The Most Common Business Interruption Incidents
Certain incidents are more likely to result in a Business Interruption claim. CGU outlines the following as the most common incidents to result in a Business Interruption claim.
Some of these are out of the business owner’s control, however there are certain events that you can, and should, take steps to prevent. While you can’t control the weather or malicious damage caused by others, there are a number of risk management strategies that your business can employ to reduce the risk of theft, fire, burst pipes and accidental damage.
If you have any queries about the above, or would like more information on Business Interruption Insurance feel free to contact us.
Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.
The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.