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  • Writer's pictureAmanda Bird

Business Interruption Insurance: A Guide for Entrepreneurs

Updated: Nov 24, 2021

For any thriving or established business that seeks to stay afloat in these trying times, one of the most undesirable outcomes is being forced to close for any length of time. Considering that such events are typically beyond the owners' control, it’s best to assume that business interruptions are an arbitrary matter that anyone should prepare for.

Thankfully, this is where business interruption insurance comes in handy.

Most business owners associate insurance with property and asset protection or legal liability coverage, but it can be applied to cases of forced temporary closure. With COVID-19 still causing lockdowns all over Australia, business interruption insurance is absolutely paramount because of the protections it provides.

Before you go ahead and get in touch with New Wave Insurance to set up a business interruption insurance policy for you, it’s crucial to brush up on the facts to know!

Defining Business Interruption Insurance

Business interruption insurance is a crucial safety measure that companies in Australia can employ to protect themselves from the implications of enforced restrictions.

Alternatively known as “business income insurance”, this solution can be purchased as an endorsement or rider to a property insurance policy or offered as part of a standard business policy.

Policyholders get coverage for operating expenses and lost income over a certain period, mainly related to closing or being unable to operate regularly due to physical damage to property by covered circumstances.

What Business Interruption Insurance Covers

Like any other insurance product, business interruption insurance can vary structurally depending on the firm offering it, especially when it comes to set coverages. However, there are some common coverages that all policies, such as the options offered by New Wave Insurance, share and provide compensation for:

  • Employee payroll

  • Mortgage, rent, and lease payments

  • Lost revenue (typically based on prior financial records)

  • Taxes and loan payments (typically due during the covered period)

  • Relocation costs incurred if the business must move to a new or temporary location due to physical or property damage

How Long Business Interruption Insurance Policies Last

When you look at multiple business interruption insurance policies, you’ll recognise one of three terms:

  • “Period of restoration”

  • “Period of indemnity”

  • “Period of liability”

These terms are used interchangeably to refer to the period in which a policy will help pay for lost income and expenses while the business is being restored.

While set periods may vary depending on the insurance provider, the average policy typically limits coverage to a specific number of consecutive days. If the set number of covered days isn’t enough, policyholders may apply for and obtain an extended coverage period in more severe cases involving recovery delays.

The Cost of Business Interruption Insurance

As ambiguous or open-ended as it may seem, the answer to the policy cost conundrum is that it depends because of the various variable costs and factors involved. Insurance policy providers typically compute the cost of business interruption insurance according to five main factors, namely:

  1. The industry an applying business is

  2. The number of employees a business has

  3. The amount of coverage a business seeks

  4. The prior loss experience a business possesses

  5. The location of a business’ premises


Dealing with interruptions to your operations can be incredibly stressful because of the degree of financial loss involved. With the help of business interruption insurance, you can best protect yourself and keep your firm afloat even after forced closure.

Are you looking for the best business insurance on the Gold Coast? New Wave Insurance has got you covered. Get in touch with us today to learn more about our products and services!

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