The importance of business interruption insurance was shown to Adelaide businesses recently. The end of September saw some of the worst storms in Adelaide’s history with 90 km/h winds and rainfall measurements of over 100mm. However it was perhaps the aftermath of the storm and the severe power outages that followed that were equally as dramatic.

The city of Adelaide and the surrounding areas saw multiple power network faults, caused by the strong wind’s damage to high voltage power lines, and the disconnection of wind farms. The storm quickly turned political and there’s been much debate raised by the events concerning renewable energy and the state’s energy supply in general.

The Storms and Your Business

There is no doubt about it, the effects of the storm were far reaching and widely felt. However what’s equally important to us is how they affected businesses. With no power and no customers on the streets, Adelaide quickly became deserted – with disastrous consequences for businesses in the vast majority of sectors.

If you’re a business owner, you’ll be only too aware of the importance of cash flow. A sudden halt can have a negative effect with research finding that most small businesses simply wouldn’t survive if forced to stop trading for even a short amount of time. Not to mention if you’re business is the in the hospitality industry, where produce would have spoiled during the lack of electricity.

Ask yourself whether you’re adequately covered in the event of an unexpected interruption to your standard business procedure.

• Could you survive?
• How long for?
• What losses would you incur?
• Could you afford all the extra costs that go alongside an unexpected event such as debris removal and purchasing new equipment?

Business Interruption Insurance

What Is It?

Businesses of any size need to expect the unexpected and ensure that they are fully covered for any scenario that sees their daily running of their business interrupted.

Business Interruption Insurance is a type of insurance that will cover the loss of income suffered by a business following a disaster. It’s sometimes known as Business Income Insurance. The income loss referred to in Business Interruption Insurance could be due to the business facility having to close due to the disaster, or the costs of the rebuilding process that ensues.

Business Interruption Insurance is designed specifically for events such as:

• Storms
• Fires
• Earthquakes
• Floods

What Does Business Interruption Insurance Do?

Some of the more specific advantages of Business Interruption Insurance include:

• Covering the costs incurred by your business including loss of stock damaged in the accident or event, as well as loss of earnings from revenue.
• Keeping your business afloat during the rebuilding process – this can take longer than expected with new building plans drawn up and council permits to be approved.
• Covering the costs of the rebuilding process including finding new premises if needed
• Making sure that your key staff can still receive wages while they wait for the business to reopen
• Cover the associated costs of the event – such as those incurred by customers unable to purchase goods.

What Length of Time does Business Interruption Insurance Cover Your Business For?

When you purchase your Business Interruption Insurance you should make sure you discuss your Indemnity Period with a specialist advisor or broker. The indemnity period is the amount of time you want to insure your business for loss of Gross Profit. This should represent the maximum amount of time you anticipate it taking in order to get your business turning over as normal after an unexpected event.

The Indemnity Period is very important and a good advisor will consider the type of business you’re operating and will explain to you the potential risks that you face. They’ll also look into how long it would take and how easy it would be to carry out repairs, regain customers and purchase any required equipment.

Take Out Business Interruption Insurance Today

The recent events in Adelaide should serve as a wake up call to any business owners currently not covered for circumstances such as those seen at the end of September. Whilst it’s common in this global economic climate for businesses to be operating on very tight margins, you can still survive an unexpected event with the right insurance.

Remember that your business is much more than simply the physical assets you own and you need to protect it against all unexpected risks with Business Interruption Insurance. Being prepared for a worst-case scenario will give you the peace of mind that if things go wrong, your business will make it through.

Not sure of you are covered if your business is unexpectedly forced to close temporarily? Contact us to get a quote or have a business insurance health check.