Business Interruption Insurance: The Cover Many Australian Business Owners Overlook
Your business survives the fire. Then it doesn't survive the recovery.
It can be one of the most costly insurance scenarios for a business. A business suffers a significant event: storm damage, fire, a burst pipe, a forced shutdown. The physical damage gets covered. But the weeks or months of lost revenue while the business gets back on its feet? Gone.
That's the gap that business interruption insurance exists to fill.
What Business Interruption Insurance Actually Covers
Business interruption (BI) insurance is designed to help place your business in the same financial position it would have been in had the interruption not occurred.
In practical terms, it can cover:
Lost revenue. The income your business would have generated during the period it was unable to operate normally.
Fixed ongoing expenses. Rent, loan repayments, utilities, and other costs that don't stop just because your business has.
Employee wages. Keeping your team on the books during a shutdown, so you don't lose the people your business depends on.
Additional operating costs. Temporary premises, hired equipment, or other expenses incurred to keep trading at a reduced capacity.
The exact coverage depends on the policy, the insured sum, and the indemnity period, which is the length of time the policy will respond. Getting those settings right is where the real work lies.
Why It's So Often Overlooked
Most business owners insure their physical assets without a second thought. Buildings, contents, vehicles; the tangible things you can see and touch.
Revenue feels different. It's harder to quantify, and the scenario of a major forced shutdown can feel abstract until it isn't.
But consider this: for many businesses, several months without income is not survivable, regardless of how well-insured the physical damage is. Suppliers still need paying. Leases still run. Staff expect wages. A business that can rebuild its premises but not its cash flow often doesn't make it back.
Business interruption insurance is property insurance's essential companion. Without it, your asset cover may only solve half the problem.
Common Mistakes to Avoid
Underestimating the indemnity period. Many business owners select a 12-month indemnity period assuming that's enough. For businesses that rely on specialised equipment, complex supply chains, or lengthy rebuild processes, 12 months can run out well before normal trading resumes. For some businesses, a longer indemnity period may be more appropriate.
Insuring for turnover instead of gross profit. The sum insured should reflect your gross profit (revenue minus variable costs) not total turnover. Overstating it leads to unnecessary premiums; understating it means a shortfall at claim time.
Assuming it's included automatically. Business interruption cover is not a standard inclusion in all commercial property or business packages. Many businesses find out at claim time that it wasn't part of their policy.
Talk to a Broker Before You Need To
The best time to review your business interruption cover is well before anything goes wrong.
At Remingtons, we work with business owners across Australia to assess their exposure, review existing policies, and ensure their cover reflects what it would actually cost to weather an interruption, not just what it cost to build what they have.
Get in touch with the Remingtons team at remingtons.com.au or call 1300 137 175.