Understanding Bushfire Risk for Small Businesses
What Are the Key Risks Posed by Bushfires?
Research1 shows that bushfire risks are rising across Australia, especially in coastal WA, central Queensland, and in large parts of NSW, Victoria, and the ACT. Bushfires can spread with little warning and can be unpredictable, with the potential to cause damage due to smoke or water as well as the fire itself.
Even businesses outside of fire zones can feel the impact of bushfires, with supply chain disruption affecting their ability to access goods and demand surge increasing the difficulty of accessing some services.
Who Should Consider Bushfire Insurance?
While you can’t control the weather, insurance can help protect small businesses across Australia from the risks bushfires pose to both their premises and trading.
Contrary to popular belief, bushfires are not just a threat facing rural businesses. Thanks to the urban sprawl of our cities, outer metropolitan suburbs are meeting the bush and increasing the risk to more businesses Australia-wide.
Did You Know?
“Bushfire seasons are getting longer and catastrophic events are increasing, as hotter, drier conditions make fuels more combustible.”
— Bushfire Risk: Changing Trends Across Australia, IAG, 2020
- $5.47 billion: The 2019–20 Black Summer bushfires resulted in $5.47 billion in insurance claims across Victoria, NSW, Queensland, and SA.
(Insurance Catastrophe Resilience Report: 2020–21, Insurance Council of Australia) - Two-thirds: Two-thirds of Australia’s small and medium-sized businesses said they were directly or indirectly impacted by the Black Summer bushfires.
(NAB SME bushfire impact survey, 2020)
Top Impacts on SMEs:
- Reduced cash flow
- Loss of customers
- Supply chain disruption
What Insurance Should You Take Out – and What Can It Cover?
Insurance can protect you and your employees onsite, on the way to work, and at work.
Business Pack Insurance
Helps safeguard your business premises and contents against:
- Damage caused by fire, storm, or accidental damage
- Equipment or machinery breakdown
- Employee dishonesty
- Glass damage
- Legal issues, such as with public and products liability
- Tax audits
- Theft, and theft or loss of money
- Business interruption – cover for financial loss due to an insured event
Motor Insurance
Protects your valuable business vehicles:
- Replace or repair a vehicle damaged by fire
- Cover for damage to other vehicles
- Accident repairs or replacement
- Cover for lost or stolen vehicles
- Legal liability protection
Workers Compensation
Covers the cost of:
- Employee wages
- Rehabilitation and medical treatment
- Illness or injury resulting from work
Important to Know: Limits, Excesses and Exclusions
Policy exclusions, excess amounts, and liability limits can vary greatly depending on your insurer and the specific needs of your business.
Case Study: Real-World Example
Brian’s Water Fun Park – Coastal Victoria
Brian runs a water fun park in a popular tourist town. While recent bushfires didn’t physically damage his property, his business was impacted by a police-ordered road closure, which blocked the only highway access to the park.
As visitors couldn’t reach the park, Brian had to close temporarily and experienced a loss of revenue. Because the loss was due to an official road closure, Brian was able to make a business interruption claim that covered his losses.
Important notice
All information in this article is of a general nature only. This information does not take into account your specific objectives, financial situation or needs. It is also not financial advice, nor complete, so please discuss the full details with your All Star Brokers insurance broker. Information is subject to change.
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