There can be no fool proof checklist for who do and who do not require business interruption. But unless you have vast cash reserves and can afford to fund your own business recovery, remember 1 in 500 businesses (McGlardrey & Pullen, 2007) will need the cover, you should strongly consider business interruption insurance if you tick any one of the following
- I or my business owns commercial property
- My business is a manufacturer
- My business is a wholesaler
- My business is a retailer
- My business relies on key stock, equipment, supplier or customer, which is not able to be immediately replaced
- My business is financed by debt
- My business would lose revenue if I was unable to operate from our existing building
- My business could keep operating after a loss but there may be significant increased costs
- It would be difficult to find alternative premises
- Our staff are key to the businesses future success
- My business does not have a business continuity plan
- My business is seasonal. We cannot afford to lose our peak season
- My business relies on Utilities
Three final comments you may wish to consider. Did you know that 30% of the claims paid out following September 11, was for business interruption losses. (American Bar Association, 2003). 1,170 people lost their job following the storms in Newcastle in 2007 due to the fact that their employers business failed to reopen due to not having business interruption insurance! (Rising Waters, 2008). A business has less than 1 chance in 10 of surviving without business interruption insurance. (Manning, 2004)
References:
McGlardrey and Pullen (2007)
American Bar Association (2003)
Rising Waters: An Assessment of the Economic and Social Impacts of the 2007 Pasha Storm, 2008.
Manning A., 2004, Strategic Management of Crises in Small to Medium Businesses,
Doctoral Thesis, Victoria University, Melbourne.
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