Business Interruption Insurance

What is Business Interruption Insurance?

Business interruption insurance is a type of insurance policy that helps companies recover from the financial losses incurred when a covered peril occurs. For example, if an earthquake causes physical damage at your factory and you cannot produce your product, this type of cover can pay out for the financial damages incurred by your inability to continue normal working operations.

Why is Business Interruption Coverage Important?

In South Africa, this type of cover is popular and important because we often experience load shedding and resulting voltage damage. Aside from the instability of the grid, other perils such as theft and riots are more common, since South Africa is one of the world’s most crime-ridden countries.

If perils like theft-related interruptions are included in your insurance policy, it could mean the difference between business continuation and having to close. The financial impact of many of these perils is so massive that businesses struggle to recover, as the coronavirus pandemic has so aptly shown.

How Business Interruption Insurance Works

To start, you can compare quotes for business interruption policies from different providers. You can check if it will cover infectious disease or government initiated national lockdowns.

If you don’t feel like searching for the ideal insurer, you can just fill in the form at the top of this page. Our system is designed to match you with the best insurer for your needs, and they will call you with an obligation-free offer.

Policies will have coverage limits but will help businesses recover from business interruption losses.

Are the proceeds taxable?

Yes, business interruption insurance proceeds are often taxable, but it depends on the situation. The payout from an interruption claim for the trade income that would have been earned in the insured event would take the form of said income and be taxed. That said, each case is different, so consulting a tax advisor is a good idea in these situations.

What Does it Cover?

Business interruption insurance covers losses caused by common perils and disasters such as fires, floods, earthquakes, hurricanes, tornadoes, hailstorms, windstorms, snowstorms, mudslides, volcanic eruptions, and wild animals. It can also cover events such as load shedding, power cuts, pandemics, and explosions.

South Africa’s insurance industry is so competitive, there are a large variety of options available. The level of cover you get will depend on what the insurer you choose offers. Each policy is different and will have its own exclusions and terms and conditions. To understand the scope of your cover, it is best to ask the insurer questions before you sign the policy agreement.

Will business interruption insurance cover coronavirus?

Some insurers in South Africa are paying out for pandemic-related business interruption losses. It is important to note that many business insurance policies now expressly exclude losses due to lockdowns or pandemics. To find out if your policy covers losses due to the COVID-19 pandemic or communicable diseases and national lockdowns, it is important to read the policy wording carefully.

Who Needs Cover for Business Interruption?

Are you unsure if you need coverage for business interruption losses? You can find out by identifying the types of perils that are risks for your business and its continued operations. Do you have coverage for pandemic-related losses?

What about the costs of paying for a temporary location to continue work if natural catastrophes destroy your office? Consider any losses you might incur if you cannot continue business operations, for example, when restaurants could not stay open during the pandemic.

Coverage for catastrophe perils and the resulting financial losses is vital for every business owner in South Africa, no matter which industry you are in. You can add business interruption cover to your business insurance policy today, along with coverage for property damage and other important forms of cover.