How business interruption insurance helps you carry on

Police at the cordan near the Primark store in Belfast that was gutted by fire Picture Mal McCann.
Diane Johnston

FROM fire to floods, storms to gale-force winds, disaster can strike anytime, anywhere, and often with little to no warning. Many businesses that are forced to suspend operations due to natural or human-caused disasters unfortunately never reopen their doors.

Trying to imagine the challenges and struggles your business would face in the wake of a natural disaster has sadly become a stark reality for numerous businesses across Northern Ireland in the light of Storm Ali.

But even more prominently, the devastating fire that engulfed Primark's Belfast store in August has had a knock-on affect for multiple businesses in the surrounding area.

Associated British Foods recently released a statement detailing that the cost for replacing the Belfast Primark store will be covered by insurance. In addition, the loss of income resulting from not being able to trade (business interruption) is also covered.

What can you learn from this to implement within your own business? How do you ensure that if your business faces a similar fate, that you are also covered sufficiently?

The difference between surviving interruption to your business and going under often hinges on one factor: preparation. The best way to prevent a disaster putting the future of your business at risk is to have a proper business continuity plan in place.

A business continuity plan involves identifying potential risks, assessing how they will affect your business, implementing safeguards and procedures to mitigate these risks, and then testing and reviewing the plan.

Managing risk often means planning for the unexpected. To maintain the safety of employees and customers, whilst also ensuring the viability of your business, you need to make sure your business is properly protected in the event of unforeseen disasters. Any threat can be serious enough to devastate your business, but if you are equipped with the right insurance, you will be able to minimise the impact.

Without business interruption insurance, you leave your company open to financial disaster, especially if you are forced to close operations for a period of time.

Insurance experts estimate that business interruption insurance is one of the most, if not the most, valuable cover available. Yet, it is often overlooked by business owners and experts suggest that around 40 per cent of all policies are thought to be under-insured.

Property insurance only covers the cost of physical loss or damage and contents of a business in the event of a disaster. Business interruption cover is invaluable in covering the loss of income while the business location is being repaired.

Many small and medium-sized businesses, regardless of industry, are risking their own survival by inadvertently remaining under-insured, which can happen when there is an incorrect buildings sum insured which does not adequately reflect the value at risk.

Business interruption can also be incorrectly calculated by not having an adequate indemnity period or not allowing for various expenses incurred. For this reason, business owners must be aware of the cover in place and should take care to discuss their policy in detail with their insurer.

Remember to consider these key elements when thinking about business interruption cover. The length of the indemnity period is an important factor, as it may take some businesses longer than 12 months to get back up and running.

This is particularly applicable if the premises are ‘listed' or need to be rebuilt, or if the business requires specialist equipment that is difficult to replace. Business owners should also consider their gross profit and how this is calculated as they may need to define uninsured working expenses.

Possessing a business insurance policy that include business interruption is fundamental in ensuring that you and your company survives any interruptions that come its way.

Don't just protect the physical shell. Make sure you also protect yourself against all forms of business loss, ensuring that your business survives and can continue to thrive.

::Diane Johnston is head of SME at Autoline Insurance Group (

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