Business Interruption Insurance

Standard business interruption policies require an underlying material damage claim. If there is no physical damage to an insured property, the BI policy does not respond. However, some policies include extensions for prevention of access (where authorities deny access to your premises), infectious disease outbreaks and utility failure, which can trigger a BI claim without direct property damage.

In insurance terms, gross profit means turnover minus variable costs such as purchases and raw materials. It is not the same as accounting gross profit. Net profit is not typically used as a BI insurance basis because it does not capture the ongoing fixed expenses that business interruption insurance is designed to cover.

The indemnity period should cover the entire time from the date of damage through to when the business returns to pre-loss trading levels. For most businesses, 12 months is the minimum, but 18 to 24 months is recommended. Businesses dependent on custom-built equipment, specialist fit-outs or council-approved rebuilds should consider 24 to 36 months.

Most standard business interruption policies do not cover losses arising from pandemics. Following the COVID-19 experience, most insurers have introduced specific pandemic and communicable disease exclusions. Some policies include limited infectious disease extensions, but these typically apply to localised outbreaks at or near the insured premises, not widespread pandemics.

Additional cost of working covers the extra expenses your business incurs to continue operating or to minimise the interruption. Examples include renting temporary premises, hiring replacement equipment, paying overtime wages, express shipping costs and outsourcing production. These costs are covered provided they reduce the overall loss to the insurer.

If your business relies on physical premises, stock, equipment or a specific location to generate revenue, business interruption insurance is important. Home-based businesses with minimal physical dependencies may have less need, but any business that would lose income following a fire, flood or major property event should consider BI cover.

All major commercial insurers in Australia offer business interruption cover, including CGU, QBE, Zurich, Vero, Hollard, Allianz and AIG. BI is typically packaged with building and contents insurance in a commercial property policy. Shielded compares BI options across our insurer panel to ensure your cover and indemnity period match your business needs.

Commercial property insurance covers a wide range of property types including office buildings, retail shops, warehouses, factories, shopping centres, hotels, motels, restaurants, cafes, medical centres, child care centres, gyms, salons, laundromats, churches, petrol stations, mixed-use developments and more. Whether you own a single tenancy or a multi-storey complex, we tailor cover to match your property.

Premiums vary based on building value, location, construction type, tenant occupation and risk profile. A small retail shop may cost $1,500 to $4,000 per year, a standard office building $3,000 to $10,000, and a large warehouse or industrial property $5,000 to $25,000+. High-risk tenancies (restaurants, manufacturing) attract higher premiums. Request a free quote through Shielded for an accurate indication.

Commercial building insurance covers the physical structure including walls, roof, floors, fixed fixtures, common areas, car parks, fencing and services (electrical, plumbing, HVAC) against fire, storm, flood, impact damage, malicious damage, theft and accidental damage. It typically also covers demolition and removal costs, professional fees (architects, engineers) and compliance with current building codes when rebuilding.

If you own a commercial building and lease it to tenants, you need commercial landlord insurance. This covers the building structure, landlord's contents (common area furnishings, HVAC systems), public liability for common areas, loss of rental income if the building is uninhabitable after an insured event, and plate glass. Your tenants are responsible for insuring their own contents, stock and fit-out.

Loss of rental income (also called business interruption for landlords) provides replacement income if your commercial property becomes uninhabitable after an insured event such as fire, storm or flood. It covers the rental income you would have received during the repair or rebuild period, typically for up to 12 or 24 months. This is essential for property investors who rely on rental returns.

Plate glass cover is usually an optional add-on, not included in the base building policy. It covers the cost of replacing glass shop fronts, windows, doors, display cases and signage glass that is accidentally broken or vandalised. For retail properties with large glass frontages, this is an important cover to include.

Generally, the landlord insures the building structure, common areas and landlord's fixtures. Tenants are responsible for insuring their own contents, stock, fit-out, trade fixtures and their own public liability. Most commercial leases clearly define these responsibilities. As a landlord, ensure your lease requires tenants to hold adequate insurance and provide certificates of currency.

Contact us at Shielded Insurance on 1800 97 98 99 or reach out to your insurer directly. We recommend notifying us as soon as possible after damage occurs, documenting everything with photos, securing the premises to prevent further damage, and keeping records of all emergency repair costs.

We compare quotes from leading Australian commercial property insurers including CGU, QBE, Zurich, Vero, Hollard, Allianz, AIG and others. The best insurer depends on your property type, construction, tenant occupation and risk profile. As brokers, we do the comparison work to find competitive and suitable cover for your property.

Review your policy annually at renewal, or whenever there are significant changes such as new tenants, renovations, extensions, changes in building use, or updated valuations. Building replacement costs increase over time – if your sum insured does not keep pace with construction cost inflation, you risk being underinsured at claim time. We recommend a professional building valuation every 3 to 5 years.