Does your business need interruption insurance post-pandemic?

Shutting down indefinitely is a financial nightmare for business owners.

Last year, in a bid to control the spread of coronavirus, governments introduced trading restrictions. This severely impacted many business owners, which in turn ignited a lengthy legal battle over business interruption insurance.

This court battle is ongoing and is expected to remain unsettled for some time. At the forefront of this dispute is the question of whether small business owners can claim for losses caused by the pandemic.

While the responsibility of resolving this matter lies with the courts, if you are looking for guidance, an insurance broker may have some helpful advice. They can keep you informed on potential risks and the types of insurance solutions that are available to you – including business interruption.

If you have been keeping up-to-date on the court proceedings, you may be put off business interruption insurance – but this could be a costly mistake. Business interruption covers you for loss of income, so if the unexpected does happen and triggers a claim that is within the policy terms and conditions, your company has a safety net to help you make it out the other side.

The importance of business interruption insurance

Even if your business is forced to close indefinitely, you will have ongoing fixed costs that need to be paid. This includes everything from rent and wages to loan repayments, all of which can add further pressure when a business’ revenue stream has been disrupted.

In one instance, a client’s property had to undergo repairs for water damage. During this time, his business interruption insurance provided him with rental income payments, alleviating stress in what was already a challenging time.

If the client did not have cover for temporary income loss, he would have had to increase the loan value of his mortgaged property.

When it comes to deciding on a policy, considering your options and ensuring you fully understand what they cover is crucial – as there will be exclusions.

When COVID-19 led to the Wimbledon tennis championship being cancelled last year, the organiser experienced the benefits of insurance first-hand. They had taken out an insurance policy for pandemic risk prior to this and, as a result of this, received a payout of almost $200 million.

If you want to protect your business against the wide range of risks that could threaten your ongoing viability, business interruption insurance is essential.

For more information on business interruption insurance, or if this article has brought up any queries, please don’t hesitate to get in touch with your insurance advisor.

Disclaimer

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.