Guide
Business interruption insurance
Property insurance repairs the damage. Business interruption insurance pays for what you lose while you can’t trade. Here’s how it works, what it pays for, and the choices that decide how well it protects you.
- How it fits with property cover
- With Insurance Council and ASIC sources
What is business interruption insurance?
Business interruption insurance pays your ongoing business costs if an insured event interrupts your business, such as a fire damaging your business property. That’s how business.gov.au describes it. Property cover pays to repair or replace what’s damaged. Business interruption pays for what you lose while you can’t trade.
What it can pay for
| Loss | How insurers describe it |
|---|---|
| Ongoing costs | Your ongoing business costs while an insured event interrupts the business (business.gov.au). |
| Lost income or profit | Lost income, profits or turnover caused by an insured event such as a fire (Allianz). |
| Your choice of basis | Allianz, for example, lets you choose which shortfall to cover: weekly income, business turnover or gross profit. |
The PDS sets out exactly what’s paid, for how long, and which events trigger a claim.
Why it comes with property cover
Business interruption is usually triggered by insured damage to your property. Allianz, for example, needs you to buy commercial property cover before you can add business interruption to its business pack.
That’s why it’s usually bought as a section of a business insurance pack rather than on its own.
Natural disasters and business interruption
The Insurance Council of Australia reports that in the five years after the 2019–20 Black Summer bushfires, insurers paid almost $20 billion in natural disaster claims, and that the average annual cost of flood rose from $620 million (the 30-year average) to $2.2 billion over the past five years.
After the 2019 Townsville floods, ASIC found that many affected businesses weren’t aware of key limitations in their cover and were at risk of being underinsured. Check which events your policy covers, including storm and flood, before you need it.
Choices that decide how well it protects you
How to compare business interruption through us
Business interruption questions
What does business interruption insurance cover?
Your ongoing costs and lost income or profit while an insured event, such as a fire, stops you trading. The PDS sets out the details.
Can I buy business interruption insurance on its own?
Usually it’s a section of a business pack alongside property cover. Allianz, for example, requires commercial property cover before you can add it.
What is an indemnity period?
How long the policy pays after an insured event. Choose one that matches how long it would really take your business to recover.
Does business interruption cover flood?
Only if flood is an insured event under your policy. Check the PDS before you need it.
Is business interruption insurance worth it?
It depends on how long you could keep paying rent, wages and bills with no income. A licensed broker can talk it through with you.
Can you give examples of business interruption?
A kitchen fire closes a café for three months while it’s rebuilt. A storm takes the roof off a workshop and the machinery inside. A burst pipe floods a shop’s stockroom before Christmas. In each case the property cover pays to repair and replace, and business interruption pays the gross profit and fixed costs lost while the business can’t trade.
What doesn’t business interruption insurance cover?
Losses without physical damage from an insured event, such as a downturn in trade, a supplier going broke or a road closure, unless the policy includes a specific extension. It also stops at the end of the indemnity period, even if the business hasn’t fully recovered.
Compare the covers
More guides
Sources
Business interruption