Business interruption insurance in Queensland: what it does and doesn't pay.

Business interruption insurance covers the income you lose while you cannot trade after an insured event. It does not cover the damage itself, and that distinction is where most Queensland claims come unstuck.

What it typically covers

• Lost gross profit while you are unable to trade.
• Ongoing fixed costs such as rent, wages and finance that keep running while revenue doesn't.
• Additional costs of working: temporary premises, hired plant and freight workarounds.

What it typically doesn't

• Losses with no physical damage trigger. Many policies still require damage at your premises.
• Supplier or customer failure, unless you have bought contingent business interruption cover.
• Utility outages, unless specifically extended. A common gap after storm season.
• Cyber-caused downtime, which sits under a cyber policy instead.
• Anything beyond your indemnity period, however long recovery actually takes.

The indemnity period is the number that matters

The indemnity period is how long the insurer will pay lost income for, often twelve months by default. In North Queensland a rebuild after major damage regularly runs longer than that, and trade rarely returns to pre-event levels on the day the doors reopen. If your rebuild plus recovery is realistically eighteen to twenty-four months, a twelve-month indemnity period leaves you carrying the difference.

Why Queensland claims get reduced

Usually for one of three reasons. The sum insured was based on an old turnover figure, there was no record of pre-event trading to prove the loss, or there was no documentation of the steps taken to reduce it. Insurers pay what you can evidence.

Worked example: what a shortfall actually looks like

A 26-room Whitsundays motel with $1.4 million in annual turnover carried a 12-month indemnity period. After a category 4 system caused structural damage, the rebuild alone took 14 months due to trade shortages and delayed engineering certification, and trade did not return to pre-cyclone occupancy until month 19 because of a slower-than-usual tourism recovery in the region. The policy paid out fully for the first 12 months of lost income. The remaining seven months of reduced trading, worth an estimated $310,000 in lost gross profit, was uninsured. An 18 or 24-month indemnity period would have cost roughly 15 to 25 per cent more in annual premium, a cost the owner would happily have paid in hindsight.

Common mistakes that cost money

• Insuring to last year's turnover figure when the business has grown. Underinsurance clauses in most policies reduce the payout proportionally, sometimes called average or co-insurance.
• Assuming utilities are covered without checking. Extended outage cover is often an optional extension, not standard.
• Not keeping a live incident log from hour one. Insurers pay against evidence, and a log written from memory two weeks later is weaker evidence than timestamped notes.
• Treating the indemnity period as a formality rather than a genuine estimate of recovery time. Ask your broker to model a realistic Queensland rebuild timeline, not the insurer's default figure.
• Discarding damaged stock before it has been assessed or photographed, which can void or reduce the related claim entirely.

What good looks like

A well-insured Queensland business reviews its sum insured and indemnity period every year at renewal against actual turnover, keeps twelve months of trading data backed up off site, and can produce a photographic asset register within minutes of being asked. None of this guarantees a smooth claim, but it removes the arguments insurers use to reduce one.

What to have ready before anything happens:

• Twelve months of trading figures stored somewhere that survives the premises.
• A dated photo and asset inventory.
• An incident log habit: decisions, timestamps and costs, from hour one.
• A written continuity plan, which increasingly influences both terms and claim outcomes.

What indemnity period should a Queensland business choose?

There is no single right answer, but businesses in cyclone or flood-exposed areas of Queensland should model their realistic rebuild and recovery timeline rather than accept a default 12-month period. For premises that could face structural rebuild, 18 to 24 months is common practice among brokers who specialise in North Queensland risk.

Does business interruption insurance cover a power outage?

Only if your policy specifically extends to utility failure, often called an extended interruption or public utilities clause, and usually only where the outage is at the supply source rather than damage to your own switchboard. Many standard policies exclude general grid outages entirely, which is a significant gap given how common extended outages are after Queensland storm season.

How is a business interruption payout calculated?

Insurers generally calculate lost gross profit by comparing the trading result you would reasonably have achieved against what you actually achieved during the indemnity period, adjusted for trends and seasonal factors. This is why accurate, well-kept historical trading records matter more than almost any other document in the claim.

None of this is financial advice, so talk to your broker. Go to that conversation with a plan and a set of numbers and you will get a different result. Our article on why insurers are asking harder questions explains what underwriters now expect to see, and our flood recovery checklist sets out the documentation an assessor will ask for.