All business owners have a lot of challenges, but many fail to contemplate what might happen if their business is suddenly unable to trade. From illness or injury to a fire at your supplier’s warehouse, there are many ways that your profit generation could be suddenly halted. While there are many rewards to being a business owner, the threat of the unexpected should not be overlooked. One of the most effective ways of keeping yourself and your business safe is through Business Income Protection Insurance. While many people have personal income protection, income protection for business owners is a much more focused form of coverage that could keep you much more safeguarded against the unexpected.

What is Business Income Protection?

Disruption to your workflow can be caused by many uncontrollable events. Business Income Insurance policies are intended to cover your living and working costs while you are unable to trade. Whether you are forced to close your business due to long-term disruption or need to cease trading temporarily, Business Income Protection can make sure that when you are able to reopen the doors you will be in a much more secure position. When work is disrupted, business owners still have bills to pay, staff wages, and supplier costs that need to be maintained. And that can be very challenging if you are not generating any profits.

Why you need it

If there was any damage caused to your business premises, such as a fire or a flood, would your current finances keep you afloat? Any kind of damage, disaster, or business interruption can have a dramatic effect on a business. Without the reliability of ongoing profits, many business owners simply lack the resources needed to stay financially secure during unexpected breaks in trading. Business Income Insurance is intended to keep you financially stable as you tackle disruption, and can be a useful resource when you’re trying to get your business back up and running to pre-disaster levels.

Did you know?

Income Protection Insurance can cover individuals or businesses, but research in 2016 revealed that only 31% of Australians have their income protected.

Research by the Australian Centre for Business Growth suggests that 13% of Australian SMEs fail due to external factors such as natural disasters, changes to regulations, or even shifts in global trends. However, the actual number may be much higher than this.

Income Protection Insurance is not a new type of coverage. In fact, the first recorded policy that was designed to protect income was back in 1880!

What it covers

Most Business Income Protection policies will vary according to your needs. However, you can expect that your policy will cover:

• The costs of relocation (temporary or permanent)
• Property damage to products or premises
• Theft of equipment that prevents you from operating
• Fixed costs
• Expenses caused by disruption
• Wage payments to staff
• Taxes
• Loan repayments

What isn’t covered?

Generally, Business Income Protection will not cover you if your business is harmed by you intentionally, particularly in cases where damage was caused by intoxication. You will also find that most policies will only cover your costs if your business suffers a loss or inability to trade as a direct result of a specific disruption.

Businesses exist to make a profit. If a business is unable to make money due to any kind of external factors that are out of the owner’s control, having Income Protection can give you the financial safety net that you need to recover and continue trading.