Three hidden business interruption risks

Imagine if your business was impacted by something out of your control – it could be damage, theft, or another unpredictable event.

Dealing with the immediate impacts are one thing, but the path to rebuilding your business, depending on the circumstances, can be another challenge altogether.

As a business owner, you may consider how to improve your business’ resilience – both for your sake, and the sake of your surrounding community. That’s where understanding the risks, and your cover options, can help if there were a disruption.

To help you get prepared, here are three overlooked risks that could delay – or derail – your business’s recovery, should the worst happen.

1. Reviewing your insurance cover – have you got Business Interruption insurance?

Some businesses insure the visible things, such as buildings, equipment and vehicles.

Less tangible parts of your business, such as income and cash flow, may be overlooked by some businesses when considering their insurance.

That’s where Business Interruption insurance can help.

Business Interruption insurance can help cover lost income as you try to get back on your feet after an insurable event, depending on the circumstances of a claim and whether it’s covered under the terms of the policy.

For example, if you can’t access your business premises, or your customers or suppliers can’t get to you, business Interruption insurance may be able to provide cover subject to the limits and conditions of the policy.

Another consideration may be fixed costs, such as rent, mortgages and utilities, that can sometimes continue to be payable even after interruption.

Depending on the policy, business interruption insurance may help with loss of income and some additional costs following an insured interruption.

2. Being underinsured – have you checked your sum insured?

Having insurance in place is one part of managing risk – regularly reviewing what’s covered (and what isn’t) can be another.

Underinsurance is when you don’t have enough insurance to cover the value of what you’re insuring. Your sums insured and indemnity periods may benefit a regular review as your business needs change.

For example, impacts of inflation may have increased costs of goods and services you may need to rebuild your business in the event of an interruption.

So, when reviewing your cover, you may decide to consider the cost of things like equipment, vehicles, property, and services.

3. Underestimating the recovery timeframes – have you considered your recovery plan if needed?

In regional and rural areas of Australia, the reality is that things can take a bit longer – so another consideration is to be realistic about how long it could take to return to normal after interruption. Things like repairs to your business premises, replacing equipment, and resolving staff disruption can all take time.

Considering potential delays, when reliant on third-party services or providers, as part of your recovery plan may be beneficial. Twelve months’ cover may seem fine on paper but consider if that’s a realistic recovery timeframe for your business if impacted.

Local understanding can make a meaningful difference when recovery timelines, seasonal income and regional constraints come into play.

Local knowledge can mean relevant insights for your business

At Elders Insurance, we know that community-based knowledge and service can make a difference during challenging times. Before the event of an interruption, taking time to understand the risks and how to navigate them can make a difference.

Contact your local Elders Insurance agent today, and speak to a local expert to discuss Business Interruption insurance cover options for your business.

Elders Insurance (Underwriting Agency) Pty Limited (ABN 56 138 879 026, AFSL 340965), acting under its own AFSL, distributes these insurance products on behalf of QBE Insurance (Australia) Limited (ABN 78 003 191035 AFSL 239545), the product issuer. Normal underwriting rules apply. Any advice provided is general only and has been prepared without taking into account your objectives, financial situation or needs and may not be right for you. Please read all sections of the relevant Policy Wording or Product Disclosure Statement and any applicable Target Market Determination to determine if the product is appropriate for you. If you are unsure, please speak with your local Elders Insurance Agent.