Business interruption insurance protects Australian companies from financial losses when unexpected events halt operations, making it essential for resilience.
Business interruption (BI) insurance is designed to cover the financial impact of unexpected disruptions to a company’s operations. Unlike property insurance, which covers physical damage, BI insurance compensates for lost income and ongoing expenses when a business is forced to close or reduce activity due to events like natural disasters, fires, or supply chain breakdowns.
In Australia, the need for BI insurance has grown significantly due to increasing climate-related risks. Bushfires, floods, and cyclones frequently damage infrastructure and disrupt logistics, leaving businesses unable to operate for extended periods. Without BI coverage, companies may struggle to pay rent, wages, or loan repayments during downtime, potentially leading to insolvency. BI insurance typically covers:
- Loss of gross profit or revenue during the interruption period
- Fixed operating costs such as rent, utilities, and salaries
- Additional expenses incurred to minimise the disruption, like temporary relocation or outsourcing
The COVID-19 pandemic highlighted the importance of clear policy wording. Many businesses discovered their BI policies excluded pandemic-related losses, leading to legal disputes and regulatory reviews. As a result, insurers and brokers now emphasise transparency and tailored coverage to ensure clients understand what is and is not covered.
For Australian businesses, BI insurance is not just a financial tool; it is a strategic asset. It enables continuity planning, supports recovery, and reassures stakeholders that the business can withstand shocks. With insurers adopting advanced technologies like AI and satellite imagery to assess claims faster, BI coverage is evolving to meet modern risks.
In a volatile environment, BI insurance helps businesses stay afloat when the unexpected strikes, making it a cornerstone of operational resilience.