Business Interruption Insurance: All the things you're afraid to ask

Let’s be honest – business interruption insurance can be, even for experienced brokers intimidating. The jargon, the financial implications, and the fear of underinsuring can make anyone hesitate.

However, if you’re working with SME clients, this is a policy you cannot afford to overlook. Their entire livelihood often depends on their business remaining operational. This blog is designed for brokers who want to engage in more confident conversations about SME insurance, and how to protect what really matters to their clients. Here’s what you need to know – and what you shouldn’t be afraid to ask.

What is business interruption insurance, really?

Think of business interruption (BI) insurance as income protection for businesses. When unforeseen events like a fire, storm, or third-party property damage disrupts operations, BI cover steps in to replace the lost income. It’s about replacing damaged stock or buildings – it’s about keeping a business alive during times when it cannot trade.

The IUA Interruption Insurance policy is specifically designed with the SME client in mind. As Assistant Underwriter, Max Currie explains, it prioritises action and simplicity.

“We’re not just underwriting risk – the IUA Interruption Insurance can assist business owners in surviving a worst-case scenario,” he says. “We have in-house loss adjusters, and the policy can provide weekly payments to clients if needed. This helps keep the lights on while they rebuild.”

Who needs BI cover? (Spoiler: More businesses than you think)

If your client’s business contributes to their household expenses or keeps a roof over their heads, business interruption cover is essential – it’s not optional. For many SME owners, there’s no backup plan if things go wrong.

Max points out that the most common sectors in IUA’s BI portfolio include retail, hospitality, wholesale, small manufacturing, office-based businesses and joiners. “These businesses typically operate on tight budgets, often without a rainy-day fund,” he says. “If something prevents them from trading, they need a safety net – and that’s what BI provides.”

To start the conversation with your client you might ask: if your business had to shut down tomorrow, could you rely on your personal savings to keep it afloat?,” says Max “If the answer is no, they likely need BI cover.”

What does business interruption insurance cover (and not cover)?

Understanding business interruption insurance doesn’t have to be complicated. The IUA Interruption Insurance covers:

1. Income lost due to events such as fire or storm damage.
2. Property damage caused by a third party.
3. Unplanned outages from public utilities.

“One of the best features of BI is that, unlike many traditional business packages that come with a 48-hour waiting period, the IUA Interruption Insurance has no waiting period at all,” Max states. “That delay can be the difference between survival and closure for a small business. We take action immediately, because we know timing is critical.”

Some events and risks are not covered – including floods, agricultural businesses, recycling operations, country hotels, and most EPS-heavy risks. IUA offers to arrange limited cover for EPS where the risk is manageable, and brokers are encouraged to submit any unusual or complex cases for review.

“Even if it’s not a perfect fit, we will always inform you quickly,” Max adds.

How do you determine the right cover amount?

Calculating the appropriate level of business income protection can feel overwhelming – but IUA simplifies the process.

“If your client can provide their profit and loss statements, IUA will handle the calculations to determine the appropriate cover,” Max explains. “Additionally, there’s no underinsurance clause – so your clients won’t be penalised if their figures aren’t exact.”

Top tips for choosing the right BI cover

Selecting the most suitable business interruption insurance doesn’t have to be difficult. Here are some key points brokers should keep in mind:

1. Partner with an underwriting agency that understands SME insurance (like IUA).
2. Look for policies with no underinsurance clause and no waiting periods.
3. Don’t avoid BI just because it seems unfamiliar – ask questions and rely on your underwriting agency for support.
4. If facing a complex risk, submit it for review. IUA will provide a straight answer quickly.

Don’t be afraid to ask

“There’s no such thing as a dumb BI question. It’s better to ask early than to address coverage gaps later,” advised Max.

You don’t need to know everything. What's essential is to start with your clients’ goals – not just their assets. With the right coverage, they aren’t merely insuring their business – they are protecting a way of life.

IUA simplifies income protection for SME’s, making it easier – for both brokers and their clients to understand. If you have any questions, please email us at underwriting@iua.com.au, and our team will gladly assist you.

Miramar Underwriting Agency Pty Ltd t/as Interruption Underwriting Agencies acts under a binding authority as an agent for certain underwriters at Lloyd’s, the insurer of the product.