Business interruption claims in Australia: what your own expert will cost

What you are paying for on a loss of profits file

The bulk of the work is analytical. Your expert reviews the business interruption section of the policy, the declared gross profit and the indemnity period, then reconstructs what the business would have earned without the damage. That involves historical accounts, BAS data, monthly sales, seasonality, budgets and adjustments under the trends clause.

Beyond the calculations, the fee also covers identifying saved costs, documenting increased costs of working, preparing interim loss statements for progress payments, meeting the insurer's adjuster and forensic accountant, answering their queries and negotiating the final figure. Because the loss evolves over the indemnity period, the engagement can last a year or more.

In other words, a business interruption fee rewards a reconstruction exercise as much as a negotiation. The more the claim depends on judgement, such as how fast a growing business would have expanded, the more the expert's analysis drives the result.

Assessor, forensic accountant or both

A loss assessor with commercial experience usually charges a percentage, managing the claim from notification to settlement. A forensic accountant more often bills hourly rates, sometimes with a capped estimate for each stage. Some assessors subcontract the accounting work and include it in their percentage; others bill it as a disbursement. Clarify which model applies, as it can double count costs if both are engaged without coordination.

Indicative amounts, to be checked with each expert.

Indicative fee bands by size of interruption loss

No official scale exists for policyholder-side business interruption fees in Australia. The table below shows an order of magnitude observed on the market for percentage-based engagements, not a regulated or legal scale. As with other claims, the rate tends to fall as the loss grows, and large matters are almost always priced individually.

Common pricing structures

Each model distributes risk differently between you and the expert. Choose the one that fits the size and uncertainty of your claim.

• Percentage of the interruption settlement, sometimes combined with the material damage claim
• Percentage of the amount recovered above the insurer's own assessment
• Hourly rates, typical for forensic accountants and for limited-scope reviews
• Staged fixed fees: one price for the initial claim, another for each interim statement
• Hybrid: a reduced percentage plus a monthly retainer during a long indemnity period
• Minimum fee and disbursements, with GST generally added on top

Claims preparation costs cover

This is the most important cost question for business claims. Many Australian commercial policies include a claims preparation costs extension, which pays reasonable fees of accountants and other professionals to produce the particulars and details the insurer requires. It is usually subject to a specific limit stated in the schedule.

Check three things. First, whether the extension covers assessors or only accountants. Second, whether it requires the insurer's consent before costs are incurred. Third, whether it excludes fees connected with presenting a dispute against the insurer. If cover applies, part of your expert's bill may be recoverable, which can make an hourly engagement more attractive than a percentage.

Three illustrative scenarios

A café closed for six weeks after a kitchen fire might have an interruption loss of around 60,000 AUD. At an indicative 10 to 12 percent, an assessor's fee would be roughly 6,000 to 7,200 AUD before GST. If the policy has a claims preparation extension, a fixed-fee accountant's report could be cheaper and partly covered.

A manufacturer losing production for four months after storm damage could claim 750,000 AUD. A negotiated percentage of 5 to 7 percent implies 37,500 to 52,500 AUD before GST, while a forensic accountant on hourly rates might quote a capped estimate in a similar range depending on data quality.

A large distribution business with a 6,000,000 AUD loss following flooding of its warehouse would typically negotiate bespoke terms, perhaps 1.5 to 3 percent or an hourly arrangement with caps, and expect a team covering accounting, supply chain and building issues.

What makes these claims more expensive

Poor or delayed bookkeeping, a business that was growing quickly before the loss, multiple sites, reliance on key suppliers or customers, and disputes about the indemnity period all increase the hours needed. Clean monthly accounts and a well-organised file can noticeably reduce the cost of an hourly engagement.

Cash flow: when the fee falls due

Business interruption claims are often paid in instalments, and percentage fees usually follow the same rhythm: the expert takes a share of each progress payment. That is easy to budget, but it means part of every interim payment goes to the adviser at a time when the business may be short of cash. Some firms agree to defer a portion of their fee to the final settlement, which can ease pressure on working capital.

Hourly engagements are normally invoiced monthly, regardless of whether the insurer has paid. Ask for a budget per stage, regular reports on hours used and a clear rule for what happens if the estimate is about to be exceeded. If claims preparation cover applies, submit those invoices to the insurer as they arise rather than waiting until the end, so any limit or consent issue surfaces early.

Checks before signing

Ask for a written engagement letter that states the fee base, rate, caps, disbursements, GST and how the fee is calculated if the claim settles early or you terminate. Confirm the firm's licensing for claims handling, ask for examples of comparable business interruption claims and find out who will do the accounting work. Be wary of any adviser who promises a particular outcome or suggests including losses that are not linked to the insured damage.

The right fee model for a business interruption claim depends on its size, the quality of your records and whether claims preparation costs are covered. Compare proposals carefully and revisit the Australian business interruption guide on expertdassure.com for the claims process itself.