Business Interruption Cover Calculator NZ

This calculator gives a New Zealand business an indicative figure for the business interruption sum insured it should carry, the cover that keeps income flowing if an insured event forces you to stop trading. Business interruption insurance is one of the most under-set covers in the country, because owners insure the building and the stock but forget the months of lost income and ongoing fixed costs while they rebuild. The cover is usually based on gross profit, meaning turnover less the variable costs that stop when trading stops, protected over an indemnity period, the maximum time the policy pays while you recover. You enter your annual gross profit, choose an indemnity period of 12, 18 or 24 months, and add an allowance for the additional increased costs of working, such as renting temporary premises or paying for faster repairs, and the calculator scales the gross profit to the period and adds the allowance to suggest a sum insured. The most common mistake is choosing too short an indemnity period: fixing a building might take six months, but rebuilding a customer base and supply chain can take far longer, so it pays to be generous. Treat the result as a starting point and confirm the basis of cover with your broker.

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$650,000
indicative business interruption sum insured
Gross profit cover$600,000
Plus increased costs$50,000

Gross profit means turnover less variable costs. Confirm the cover basis and definitions with your broker. Estimate only.

How it works

The calculator multiplies your annual gross profit by the indemnity period in months, divided by 12, to scale the cover to the recovery window, then adds your allowance for additional increased costs of working. The total is an indicative sum insured for the business interruption section of your policy.

Worked example

A business with 400,000 dollars of annual gross profit choosing an 18 month indemnity period needs 400,000 times 18 over 12, which is 600,000 dollars of gross profit cover, plus a 50,000 dollar allowance for increased costs, a total of 650,000 dollars.

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Frequently asked questions

What does business interruption insurance cover?

It covers the loss of income and ongoing fixed costs when an insured event, such as a fire or flood, stops your business trading. The cover is usually based on gross profit over an indemnity period.

What is the indemnity period?

It is the maximum time the policy will pay out while you recover, often 12, 18 or 24 months. Choose a period long enough to rebuild, restock and win back customers, which can take far longer than fixing the premises.

How is the sum insured worked out?

Take your annual gross profit, scale it to the indemnity period, and add an allowance for the extra costs of keeping going, such as temporary premises. This calculator does that to give an indicative figure.