Finding the right business interruption insurance policy to fit your specific needs is important, so let’s run through the various factors you should consider when seeking cover through your business insurance broker.
Where do I start?
You need to ask yourself a few questions to get the ball rolling. For example:
- How long would my business take to get running again after a worst-case scenario claim, taking into consideration the time it would take to rebuild or replace as well as the time to build the business back up to the pre loss levels of turnover and profitability?
- Would we still be able to operate while our primary premises were being rebuilt and at what level?
- Do we have other ways to minimise downtime to prevent loss of critical staff and client or customer churn?
- What additional costs or savings will you incur due to the loss taking place?
Once you have a rough idea of the answers to these questions, your commercial insurance broker can begin to determine what level of cover you require, as well as determining the preferred indemnity period.
What is the ideal length of cover?
Organisations typically opt for 12 months as a default indemnity period, but this has shown not be enough time for most businesses to recover from a major catastrophe.
Would you be able to clear a site, get new plans through the council, rebuild a property, restock and or replace key equipment, retrain new staff, as well as getting the business trading at the same level as before – all in one year?
Every organisation is different, but MGA’s Insurance Brokers usually suggests a 24-month indemnity period as a minimum for peace of mind. It may be, depending on your circumstances, that an even longer indemnity period is required.
What can be covered within the sum insured?
Comprehensive business interruption insurance needs to cover a number of areas where you incur losses after an incident. These include:
- Gross profits;
- Wages and payroll;
- Increased costs of working;
- Additional Increased costs of working
- Claims preparation costs;
- Book debts; and
- Gross rentals.
Organisations face unique risks depending on their location, size, industry and other factors, so ensure your business interruption cover is tailored specifically for you.
Your insurance broker will guide and provide advice on how to best cover your business.
How are claims assessed?
Business interruption claims can be complex. Your needs are likely to evolve throughout the claim, as timeframes are confirmed for premises rebuilding, machinery supply and re-establishing the business.
Ideally, your claim should be assessed within 24 to 48 hours of the business interruption event. If you have elected to cover for claims preparation costs, professional claims preparers will work alongside your insurance broker to facilitate the process.
After your business insurance broker, in conjunction with your accountant or claim preparation professionals, lodge the claim and it is accepted, your insurance broker and claims preparer will work with the insurer towards gaining an initial payment as soon as possible after the loss event occurs. Subsequent payments will then be made throughout the indemnity period, following reports lodged with your insurer, substantiating the ongoing losses.
How can an experienced commercial insurance broker help?
Experienced commercial insurance brokers can guide you through all the steps required to ensure you are adequately covered for catastrophic events that interrupt business as usual.
MGA Insurance Brokers, have representation across Australia where professional brokers work closely with the insured, as well as their accountants and claims preparers, to ensure that the financial aspects of the client’s business are covered though business interruption.
Insurance Brokers will obtain quotes through various insurers on their business packages to find the ideal product for your needs. We also have access to specialist insurers that provide business interruption insurance as a standalone product, which can often be a more suitable solution for some clients.
Would you like to discuss your business interruption cover requirements? Contact MGA Insurance Group today.