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What does BI mean in insurance?

Business Interruption Insurance

BI in insurance refers to "Business Interruption." Business Interruption insurance is designed to compensate businesses for the loss of income they might experience due to certain unexpected events.

Why does a business need BI insurance?

Every business, regardless of its size or nature, may face situations where operations come to an unexpected halt. Business Interruption insurance provides a safety net for such scenarios.

Unexpected events are unpredictable

Natural disasters, fires, or other unforeseen circumstances can interrupt operations without warning.

Loss of income can be devastating

If a business cannot operate, it cannot generate revenue, potentially leading to severe financial strain.

It offers peace of mind

Knowing that there's a backup plan in case things go wrong can help business owners focus on their core operations without constant worry.

What does BI cover in insurance?

Business Interruption insurance typically covers:

  • Loss of income: This represents the money you would have earned during the period of interruption.

  • Operating expenses: Even if your business is not operational, bills such as rent or mortgage, utility costs, and salaries might still need to be paid. BI covers these.

  • Relocation costs: If your business needs to move to a temporary location, BI can cover the expenses.

How does BI insurance work?

  1. An unforeseen event occurs, leading to the halt of business operations. This event should be one of the covered perils in your insurance policy.

  2. You report the loss to your insurance broker or provider.

  3. The insurance company assesses the situation, calculates the loss of income and added expenses due to the interruption.

  4. Upon approval, the insurance provider compensates you according to the terms of your policy.

What are the advantages and disadvantages of BI?

When deciding on business insurance it’s essential to weigh the pros and cons:

  • Financial Stability: Ensures that even if your business stops, the income doesn’t, allowing you to maintain stability.

  • Coverage of ongoing expenses: You can continue to pay your bills and retain staff, even during interruptions.

  • Recovery support: Helps in getting your business back on its feet after an interruption.

  • Can be expensive: Premiums for BI insurance can be high depending on the industry and risk factors.

  • Coverage limitations: Not all causes of business interruption are covered. It’s essential to understand what perils are included.

  • Waiting periods: Some policies might have a waiting period before the cover kicks in.

Common misunderstandings about BI insurance

  • “All interruptions are covered:” Many believe BI covers all interruptions, but it primarily covers those specified in the policy.

  • “Coverage starts immediately:” Some policies have waiting periods.

  • “Compensation is based on projected revenue:” Compensation is generally based on historical earnings.

How can Gerrards help?

As an insurance broker specialising in business insurance in New Zealand:

  1. Tailored Policies: Gerrards can guide you in customising a BI policy tailored to your specific business needs.

  2. Expert Advice: With our vast industry knowledge, we help demystify insurance jargon and ensure you understand every aspect of your policy.

  3. Claims Assistance: If disaster strikes, Gerrards stands by you, assisting with claim processes and ensuring you get the right compensation.

For businesses in New Zealand, the unexpected can happen anytime. By understanding the importance of Business Interruption insurance and having a trusted partner like Gerrards by your side, you can ensure that your business remains resilient through thick and thin.

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