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  • Writer's pictureAmanda Bird

How Business Interruption Insurance Works and Why It Matters

It's no secret that running a business isn't easy. As a business owner, especially for a startup, you shoulder most responsibilities, such as managing people and ensuring profitability and customer satisfaction. Running a business always comes with risks, such as damaging your store. Luckily, business interruption insurance can help with this.

Business interruption insurance is a form of business insurance that covers the income losses of your business. When calamities such as a fire or a flood happen, your company becomes damaged and unable to entertain customers. When this happens, you can make claims to compensate for that time your business was not functional for its usual operations. It's safe to say that it's highly beneficial, but many business owners still have reservations because they think it's just an added business expense. For this reason, we'll discuss what it covers and why you should get one.

More about Business Interruption Insurance

Business interruption insurance is a type of property insurance, and it's usually part of the other property insurance. It covers the business's costs when it's unable to generate revenue, whether due to property damage or because the company is closed temporarily due to theft or war.

This insurance also covers the sudden closure due to an event or incident beyond the business owner's control. For example, if there's a natural disaster, the business will be compensated for its time to shut down. It can also pay for the costs of replacing and repairing the damaged property of your business.

What Does Business Interruption Insurance Cover?

Business interruption insurance is particularly beneficial for businesses that operate regularly, such as restaurants, hospitals, and retail stores. It becomes necessary to be insured if you need to cover the losses that may happen while your business is rebuilding or repairing. Because of this, it's also worth knowing what's covered, and these usually include:


Turnovers are the losses that you'll incur from interrupting business operations. Whether you have to close your business because of the damage or the sudden closure, you'll receive compensation for the turnover.


If your business temporarily closes and you decide to move to a different location, the business interruption insurance will pay for the additional costs. It can also help with the additional costs of moving equipment and business records.

Record Restoration

If your business keeps important financial records, this insurance can help with the costs of restoring your documents in case they get damaged. Whether it was damaged due to a fire or theft, the insurance can help with the costs.

Limited Transit

Limited transit refers to losses when goods are moved, such as the transportation used to carry your merchandise. It also covers the additional costs of shipping the goods from one location to another.

What’s Not Covered?

Like any other insurance, business interruption also doesn't cover certain things. These include:

Undocumented Income

When the business is closed, it's hard to provide documentation for lost income. That's why business interruption insurance won't cover the income that cannot be proven.

Voluntary Closure

If you decide to close your business due to normal circumstances, you won't be able to claim the income you might lose. Furthermore, it won't cover the closed company because it lacks operation and maintenance.

Losses beyond the Indemnity Period

The indemnity period is the maximum amount of time that your business is allowed to close due to the damage. If the business is closed beyond this coverage period, you won't be able to make a claim.

Non-Covered Damages

Business interruption insurance doesn't cover damages such as cyber-attacks, which cannot be repaired or replaced. You can buy additional cyber insurance, but it will come with an increased premium.


It's always a good idea to have business interruption insurance, especially if your business is dependent on being open daily. Aside from helping you manage the financial losses your business might incur, it also helps protects your business from the financial risk you're taking. All that matters is that you have the right insurance, and this insurance could mean the difference between a profit and a loss.

If you’re looking for business insurance in Gold Coast. QLD, New Wave Insurance has what you need! We offer different insurance options to ensure you and your property is protected, all for affordable prices. Simply go to our website to book a free consultation!

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