Business Interruption
Insurance

Business interruption cover is one of the most critical sections of an ISR policy. While property damage insurance pays to repair or replace your physical assets, it does not compensate you for the income lost while your business is unable to trade. That is where business interruption cover steps in.

This section indemnifies you for the reduction in gross profit and the increased costs of working that result from an interruption to your business operations caused by an insured event - such as a fire destroying your warehouse, a flood damaging your shopfront or a storm disabling your production line.

For many businesses, the financial impact of lost revenue and ongoing fixed costs such as wages, rent, loan repayments and utilities far exceeds the cost of repairing the physical damage. Without business interruption cover, even a well-insured business could face insolvency during a prolonged shutdown.

Business interruption cover is subject to the same event-based exclusions as the property damage section - it only responds when the underlying cause of the interruption is an insured event. Additional exclusions and limitations include:

• Losses arising from events that are excluded under the property damage section
• Interruption not caused by physical damage to insured property (unless a specific extension applies)
• Fines, penalties and contractual liabilities arising from late delivery or non-performance
• Losses beyond the declared indemnity period
• Loss of market share or goodwill that extends beyond the indemnity period
• Deliberate under-declaration of turnover or gross profit (underinsurance provisions may apply)

Accurate declaration of your gross profit, turnover and indemnity period is essential. Underinsurance in this section can result in a significantly reduced claim payout through the application of average (proportional reduction).