Business Interruption Insurance provides cover in the event of a fire or associated peril claim and provides protection for the businesses gross profit. This section of the policy should include claims preparations costs as well as covers for additional increased costs of working following a loss.
Getting the indemnity period right for Business Interruption Insurance is extremely important. A company’s chances of survival following a major incident may be drastically reduced if the indemnity period is incorrect.
Potential delays should be factored in when setting an indemnity period. The process of returning a business to its pre-loss financial position can be long and sometimes 12 months is not enough.
Many intervening factors can emerge during the interruption period, including:
- A requirement for further investigation into the incident’s cause, especially in larger fires where the coroner becomes involved.
- The presence of asbestos, which requires involvement from the relevant environmental authority and can hold-up the damage assessment until the site is deemed ‘safe’.
- Involvement of the relevant WorkCover authority if employees have suffered a serious injury or died.
- Council re-zoning preventing the business from rebuilding on the damaged site.
- Building design needing to be updated in line with new regulations.
- Replacing damaged plant and equipment can be an issue if it is unique or needs to be imported from overseas.
- The right resources may not be available when the business is ready to resume operation.
In the event of one or more such delays, 12 months may no longer seem like such a long time.
For the business owner woken in the middle of the night by the news their livelihood has been reduced to ashes, knowing their insurance cover will provide enough funds to rebuild and pay for overheads will provide some measure of comfort during a traumatic time.
Optimum Insurance Services provides a range of Business Interruption Insurance Products available that can be tailored to your specific needs. To obtain a quote or for further information, click here to go to our website or call us on 1300 739 861.
Disclaimer – “This material contains general information only and may not suit your particular circumstances. To decide if a policy is right for you please carefully read the relevant Product Disclosure Statement (PDS) and/or Policy wording. While we have exercised due care and skill in preparing this information, Optimum Insurance Services (Optimum) does not accept any legal responsibility or liability for negligence or otherwise to you or anyone else who seeks to rely on this information. This includes, without limitation, loss arising from a possible failure of the information to comply with statutory or regulatory requirements or the failure of the information to identify other terms and conditions beyond those considered in this document. You should obtain advice to ensure that your policy provides adequate cover for your circumstances.
Optimum Insurance Services Pty Ltd is a Corporate Authorised Representative of Insurance Advisernet Australia Pty Ltd (Car No. 291220), Australian Financial Services Licence No 240549, ABN 15 003 886 687.”