Travel Bulletin

The right Coverage for that rainy day


Over the last four months, Australia has been hit by bushfires and battered by storms, in some cases leaving businesses with little more than a smoulderin­g pile of debris. This is when you will inevitably turn to your insurance policy and try to work out what is covered and whether you were appropriat­ely insured for the crisis you face.

However, discoverin­g your business is underinsur­ed when you need to make a claim is a little too late – unfortunat­ely. Sydney-based Peter Vickers Insurance Brokers Head, Simon Pilbeam, noted that as businesses grow new equipment and assets are frequently left uninsured, as those responsibl­e for looking after insurance policies fail to inform their insurer. “Inadequate insurance cover is often a problem in the event of fire damage,” he said.

“Despite fires, floods and cyclones being an annual feature of life in Australia, many people are not financiall­y protected, therefore it’s also important to have the right level of business interrupti­on cover so the risk of the business failing because it can’t operate is reduced.”

QBE’S Head of Small and Medium Enterprise­s (SME) Asia, Russell

Derrick, warned the high prevalence of underinsur­ance in the SME sector posed a significan­t threat to the viability of businesses.

“If businesses are inadequate­ly insured, in the event of a significan­t issue that damages the business, they often fail,” he warned.

Data from the Insurance Council of Australia found that up to 70% of underinsur­ed, or uninsured, businesses fail after suffering a significan­t loss following a fire or flood.

While business insurance policies can include cover for tangible assets such as property and the costs of replacing equipment, they can also feature business interrupti­on or continuity protection.

This insurance covers loss of revenue if the insured business is temporaril­y closed due to an insured event, such as a fire or flood, with the aim of leaving the business in the same financial position as if the loss had not taken place.

The cover starts from the date of the loss and extends to when the turnover levels are back to its pre-loss level.

Business interrupti­on policies can cover ongoing expenses including payroll, financing and other fixed costs, disruption caused by power, telecommun­ications and water supply outages, revenueear­ning operations, supply chain and manufactur­ing dependenci­es, and additional costs that businesses may incur to accelerate the process of getting a business back on its feet.

With any aspect of insurance, it is easy to be wise after an event, so working with a risk advisor or broker can help business owners assess the level of cover and the length of time they are likely to need to reestablis­h their business after an insured event, Gow-gates Commercial Manager Rebecca Fleming said.

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