Businesses have been hit with plenty of disruptions over the past few years, from COVID as well as from natural disasters.

Some business insurance packages have changed to adapt to the new circumstances, so it’s important to check what’s covered and whether you need to update your policy.

Don’t count on COVID cover

The pandemic affected businesses in unimaginable ways, with premises needing to close and staff having to isolate. However, businesses that believe they can get cover for pandemics will need to think again. Steadfast Broker Technical Manager Michael White says it’s unlikely any pandemic cover will be available in the future.

“The only cover for contracting a disease will likely be related to very specific things, such as food poisoning or Legionnaires disease,” he says. “Cover will be limited to those diseases that are very specific to particular businesses, or particular premises.”

He adds insurers’ appetite for risk has changed since the pandemic. “They are much more conservative now,” he says. “And this is reflected in what they will cover and under what circumstances.”

Cyber attacks a major concern

COVID led to millions of people working from home but with that came a greater risk of cyber-attacks. White says insurers are introducing what they refer to as silent cyber or non-affirmative cyber into their business packs.

Silent cyber refers to any potential cyber losses that are contained in traditional property and liability policies that were not specially designed to cover cyber risk. Traditional liability polices weren’t set up to include cyber exposures, White says, and may not deal with risks such as software viruses or malicious code.

“You can get business interruption cyber cover in some cyber policies,” White says. “But in traditional insurance policies you need physical damage to have occurred to the property. Some insurers have now removed any possibility of giving business interruption cover, or any other cover, where a cyber-attack doesn’t cause physical damage.”

How natural events have affected cover

The natural disasters Australia has experienced are also playing a role in changes to cover. Flood cover has always been difficult to get, especially if a business was exposed to flooding. White says the recent flood events haven’t made the situation any easier. “Flood cover is available but the cost of it can be very high, which means many small business owners just don’t take it out.”

He adds insurers are now more cautious about areas that are exposed to disasters such as bush fires. “For example, some insurers are now looking at access issues in relation to bushfires, such as whether there is only one road in and one road out of a particular area, which increases risk. That’s the kind of thing insurers want to know.”

He adds if businesses have closed their premises recently and moved their operations online, it’s important to speak to a broker to check they are still fully covered for damage to any premises they own.

Brian Hong, CEO of Infintech Designs, says the pandemic made him rethink his company’s insurance needs. “I thought I had the perfect insurance policies in place, but the pandemic really tested us,” he says. “I’m now very particular about policies that prioritise lost business income.”

Is it time to sense check your insurance cover? Talk to your broker or advisor today.