When you can't trade, your bills don't stop. This is the cover that keeps paying them until you can.

Quick answerBusiness interruption insurance pays two things: the profit your business loses while it can't trade normally, and the extra costs you reasonably spend to get trading again faster. It does not cover a building; it covers the income the building was helping you generate. If you're a landlord asking about lost rent rather than lost trading income, that's a related but different cover. See loss of rent for commercial landlords.

Three things sit inside a properly built policy.

Lost profit. Not your revenue, your profit, calculated the way the policy defines it rather than the way your tax return does (the definition matters more than most people realise, and it's covered in Common Mistakes below). This is what replaces the money that would have hit your bank account if the event had never happened.

Fixed costs that don't stop. Rent, permanent staff wages, loan repayments, leased equipment, and anything else your business owes regardless of whether the doors are open. These are the costs that turn a temporary closure into a permanent one if nothing is paying them.

Additional Increased Cost of Working (AICOW). The reasonable extra money you spend to get back to trading sooner, such as short-term premises, hired equipment, or extra staff to clear a backlog, even where what you spend is more than the income it saves. Without this section, a policy will only refund extra costs up to the income they protect, which punishes you for trying to recover fast. On the business pack wordings we place, $25,000 of this comes included as standard, and the limit can be increased where a real recovery plan needs more.

All three run for the indemnity period, the maximum length of time the policy keeps paying once a claim starts, not for however long the actual disruption happens to last (more on choosing that length in the FAQ below). That single fact does more damage to underprepared businesses than any exclusion in the policy.

Quick answerA direct insurer will sell you whatever indemnity period and profit figure you type into a form. Consolidated Insurance Brokers treats both as decisions worth getting right: we set your default at 18 months, actively recommend 24 months wherever we can, and only use the 12-month floor if you won't pay for more or specifically instruct us to. The final period is always your call, we just make sure it's an informed one.

It starts with the profit figure. When we set up or renew business interruption cover, we ask you for a copy of your most recent financial statements, so the figure that goes on the policy comes from what the business actually earns, not a number remembered from a form filled in years ago.

Then the period. The most common reason business owners push back on a longer period is premium, and it's a fair conversation to have, because business interruption premium behaves very differently depending on who you are. For a commercial building owner, stepping up from 12 months to 18 usually doesn't add much to the premium, so 18 months is where most land. For a trading business the premium difference is much bigger, which is exactly why the period deserves a real conversation against your own recovery timeline rather than defaulting to the cheapest box.

What we won't do is let the tenant/landlord question go unanswered. If you lease your premises, this policy is yours to hold, not something you can assume is baked into your landlord's building insurance. If you own the building your business trades from, you may need this cover and loss of rent cover, potentially through two different entities, and we check which situation you're actually in before we quote anything (see owner-occupier insurance if that's your structure).

Quick answerThe two costliest mistakes are declaring a "gross profit" figure using the accounting definition instead of the insurance definition, and defaulting to a 12-month indemnity period without checking how long the business would genuinely take to recover. Both mistakes look harmless on the policy schedule and only show up as a shortfall at claim time.

Mistake 1: Using your accountant's gross profit, not the policy's. The "gross profit" a business interruption policy insures is not the line on your tax return. It's built from your turnover, adjusted for stock movements, minus the costs that stop automatically when you stop trading. Get that number wrong, usually by declaring too low a figure or simply guessing, and the same underinsurance penalty that applies to a building sum insured applies here: on a partial disruption, the payout gets reduced in proportion to how far short the declared figure was; on a total shutdown, you're paid up to the declared figure and nothing more, even though the real loss was higher. In a determination published in 2025, a Sydney hairdressing salon reduced its declared gross profit figure from $350,000 to $150,000 in a phone call to the insurer after the business split into two entities, while the correct insurable value of its gross profit was later assessed at $1,151,905. When a claim landed across four separate pandemic closure periods, covered under that policy's disease extension rather than its base physical damage cover, the assessed loss came to $672,769, but the underinsurance clause cut the payout down to $143,512, because the declared figure had fallen so far short of what was needed. There's a way to defuse that trap: a business interruption figure that's properly calculated, worked out from a BI calculator against your GST-exclusive BAS figures rather than guessed. A properly calculated figure gives the underinsurance clause far less to work with.

Mistake 2: Defaulting to 12 months. Twelve months is the cheapest option and the most common one, and it's also the one that assumes your business bounces straight back to full trading the moment the doors reopen. It rarely does, as the recovery gap above shows. Set the period against a realistic recovery timeline for your specific business, not the default.

Mistake 3: Skipping or not understanding AICOW. Without Additional Increased Cost of Working cover, spending money to reopen faster can cost you more than it saves you under the policy's own maths. It's a genuinely useful section that gets left off because nobody explained what it does. The wordings we place include $25,000 of it as standard, and it is worth checking whether that is enough, because a real recovery push, temporary premises, hired equipment, extra staff to clear a backlog, often costs more than the automatic amount.

Mistake 4: Assuming this is the same as loss of rent. A tenant needs business interruption. A landlord needs loss of rent. They are not interchangeable, and having one does not mean the other exists somewhere in the arrangement. If you're not certain which applies to you, the section above on who needs this cover walks through it.