In a recent blog post, Professor Allan Manning found in his and insurers’ research that 84% of SME business owners believe they are fully insured, while only 2% of Australian SME businesses are fully protected with business interruption insurance.
There is clearly a disconnect between what people believe they have, to what they really need, when it comes to a claim. This is across most classes of insurance but arguably none more so than business interruption insurance.
Furthermore, around half of all SMEs that have an insurable loss fail within two years as a result of inadequate cover.
What is business interruption insurance?
Business interruption insurance covers the shortfall in gross profits caused by the interruption to a business from insured events, helps pay ongoing costs and protects profit margins until the business is back on its feet and back at its profit level before the interruption.
Would your business survive a prolonged interruption?
Our insurer partner, CGU, published its findings from a recent survey of nearly 500 small businesses, which found that one in four would not survive if they had to close their doors for three months.
Perhaps the most striking finding was that 1 in 7 businesses experienced a shortfall in income because of a business interruption in the past 12 months.
What can business interruption insurance cover?
Business interruption insurance can help keep you afloat while you wait for plans to be drawn up or council permits to be approved when rebuilding. It can also cover the costs of finding and fitting new premises, advertising to let your customers know you have moved and when you’re fully open for business again. Proper protection can ensure you are able to continue to pay and retain key staff while the business gets back on its feet. It can also cover interruption costs to your business, even if the damage is to another business you don’t own, such as suppliers not supplying, key customers unable to purchase your goods or when power or gas outages limit your ability to do business.
