A state-wide blackout that crippled South Australia in September last year cost industry in the area over $367 million. According to a study recently released by Business SA, many of the affected businesses in the area did not have Business Interruption Insurance. Of those that did, more than half were not adequately covered for all of the losses incurred as a result of the unexpected outage. The report estimated that the blackout cost each business affected around $5,000.
Unfortunately, this is a common occurrence. In many cases, price-focused small business owners have to keep their costs down and as a result may not buy insurance at all or may only have cover in place for certain losses such as fire, theft, flood or vandalism. However, it’s important to bear in mind that these disasters will not only harm your business’ physical assets, but may also make it difficult to continue operations for an extended period of time. In fact, in the event of serious property damage, it’s not uncommon for the Business Interruption component of a claim to be greater than the cost of repairing the physical property damage.
Business Interruption Insurance covers lost income when a company cannot operate, after an insured event has affected them. While your Business Insurance may cover the costs of repairing or replacing important business assets, the process of doing so can take some time. In the period of time between the disaster striking and getting your business back on its feet, you may find your operations are restricted or completely unable to function, which in turn, is likely to cause a loss of profit. Depending on how badly your property has been damaged, you may lose cash flow and fall behind on bills, or you may have to pay staff extra wages as they work overtime to get the business back on track.
Business Interruption cover makes is possible to stay afloat while your business returns to full operating ability by covering costs such as paying your staff, taking care of debts and covering other costs associated with getting your business back on track.
A successful business depends on more than just a physical location and tangible assets. It’s important to ensure you are fully protected for these additional costs, so that you’re not left out of pocket if disaster strikes. Speak to your insurance adviser for more information on fully protecting your business.
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.