Interruptions to business

While many businesses buy material damage (property) insurance, less of these businesses buy a business interruption insurance.

Business Interruption can provide cover for your losses following a power cut, such as not being able to sell anything due to lack of eftpos, or not being to make anything because your machines won’t run.

While there may have been no physical damage loss at your premises, cover is provided using a utility extension that is common in NZ policies.  This gives a business protection from an external utility failure, like power or water.

Can I make a claim?

Cover is usually provided up to a set percentage of the insured amount (it’s common to see 5% or 10% of the annual limit).  This reflects the probability of outages being of relatively short duration.  To avoid having claims every single time there’s a small outage, Insurers also limit cover to outages where the supply is interrupted for more than a set period of time (usually 24 hours or 48 hours) so it has to be a major event to trigger the cover.

The Penrose substation outage is such an event, and business owners with Business Interruption cover should talk to their broker about their specific policy to see if it’s worth lodging a claim.  If you have no such cover but would like to talk about this, speak to your broker.

By Tim Wilkes, previously Commercial Broker @tim wilkes.