The Insurance Council of Australia estimates that less than 50% of small business owners hold a Business Interruption Insurance policy. This is an alarming statistic, considering that small businesses, like some medical practices, have a far less chance of surviving a major loss without this insurance cover in place.

Most practice owners understand the importance of insuring their tangible business assets from natural perils, such as fire, flood, storm and earthquake.  Unfortunately, many medical businesses don’t always consider the impact of not being able to trade for a period of time because of a catastrophic event. When advising medical practices on their insurance needs, one of the first questions our MIGA Plus Business Insurance team ask is “What would happen to your business if it was unable to trade?”.

Business Interruption Insurance is one of the most important, yet least understood classes of insurance. It’s not something that protects the business owner themselves, in the way that an income protection insurance would; instead, it’s an insurance that protects the ‘insurable gross profit’ of the business itself.

Following a claim where physical assets are damaged as a result of a natural peril, there will inevitably be a downturn in turnover and associated gross profit. Business Interruption Insurance seeks to indemnify the business for that loss of gross profit over a specified period of time, which for example may be 6, 12, 18 or even 24 months.

Even once the repairs to physical premises are complete, a business may not necessarily return to the same level of activity, and therefore gross profit it was earning prior to the damage occurring.  For example, previous patients may have found alternative providers or be slow to return if unaware the practice is back up running.

Business Interruption Insurance can continue to make up the shortfall in gross profit even after a practice begins trading again, until such time as the business returns to pre-claim gross profit levels.

Remember, setting the correct sum insured is essential to maximising your entitlements under the policy in the event of a claim and to avoid any costly exposure to underinsurance. Above all, you should ensure that Business Interruption Insurance should complement and not substitute a sound business continuity plan.

For more information on this cover and other policy features available through MIGA Plus Business Insurance, speak to our expert team on 1800 835 808 or via email at businessinsurance@miga.com.au. You can also view available packages and provide your details via our simple online form to obtain a quote – just visit www.miga.com.au/business-insurance

Insurance issued by Guild Insurance Ltd ABN 55 004 538 863, AFSL 233791. This information contains general advice only and does not take into account what you currently have, want and need for your personal circumstances. It is important for you to consider these matters and read the policy and/or the Product Disclosure Statement (PDS) before you make a decision about an insurance product. Subject to underwriting approval. Terms and Conditions apply (including exclusions and limitations). You can get a copy of the PDS by calling 1800 835 808.

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