Independent help with a business interruption claim in New Zealand

How interruption cover is triggered

Most New Zealand business interruption policies respond only when the interruption follows insured physical damage, usually at your own premises. This link, often called the material damage proviso, means the property claim and the interruption claim must be read together: if the material damage claim is declined, the interruption claim usually falls with it.

Some policies extend cover to damage at a supplier's or customer's premises, to loss of access when nearby property is damaged, or to failure of public utilities. These extensions often carry their own sub-limits and conditions, and they became a focus of attention after the major North Island weather events of 2023, when road closures and outages affected many businesses that suffered little direct damage.

Key terms worth understanding before you claim

Reading your schedule with these concepts in mind will help you understand the insurer's approach.

• Indemnity period: the maximum time after the damage for which loss is covered, commonly 12, 18 or 24 months
• Gross profit or revenue basis: how the insured amount is defined, which affects how the loss is calculated
• Increased cost of working: extra expenses incurred to keep trading or reduce the loss
• Savings: costs that stop during the interruption and are deducted from the claim
• Underinsurance or average: a reduction applied if the sum insured was too low compared with actual figures
• Waiting period or time excess: the initial days or hours for which no interruption loss is paid

Roles on each side of the claim

The insurer usually appoints a loss adjuster to manage the claim and may bring in forensic accountants to test the figures. Their task is to measure the loss under the policy as the insurer interprets it.

On your side, help can come from an independent claims advocate or public loss assessor with interruption experience, from a forensic or chartered accountant, or from both working together. Your broker can also assist, although a broker's role and capacity for detailed claims work vary. What matters is that the person you appoint acts only on your instructions.

Building the loss: a typical sequence

Notify the insurer immediately and record what was damaged, when trading stopped and what steps you took to keep going. Early decisions such as temporary premises, overtime, outsourcing or hiring equipment can reduce the loss and are often claimable as increased cost of working, but discuss significant expenditure with the insurer first where possible.

The advisor then builds a model comparing the income the business would reasonably have earned with what it actually earned. This rests on historical trading, seasonality, growth trends and any special circumstances such as new contracts. As the indemnity period runs, the claim is updated and interim payments can be sought to support cash flow.

Finally the figures are negotiated with the adjuster and the insurer's accountants. Differences commonly centre on the projected trend, the treatment of savings and whether some losses were caused by wider economic conditions rather than the damage.

Records the insurer will ask for

Keep your records organised from day one; requests will come repeatedly over the life of the claim.

• Annual accounts and management accounts for several prior years
• GST returns and bank statements
• Budgets, forecasts and evidence of new or lost contracts
• Payroll records, including staff retained or stood down
• Invoices for extra costs incurred to keep trading
• Correspondence with landlords, suppliers, customers and councils about access or reopening

Common points of disagreement

Disputes most often involve the length of the interruption, especially when repairs are delayed by consents, materials or builder availability, and whether the indemnity period is long enough. Insurers may also argue that sales would have declined anyway due to market conditions, or that the business did not do enough to mitigate.

Underinsurance is another frequent issue. If the declared gross profit or revenue was lower than actual figures, the payout may be reduced proportionally, which is why reviewing your sum insured before a loss is as important as any claim strategy.

Escalating an unresolved claim

Start with the insurer's internal complaints process and request a final written response. Smaller businesses may be able to take the complaint to the insurer's dispute resolution scheme, generally the Insurance and Financial Services Ombudsman Scheme or Financial Services Complaints Limited, subject to eligibility and monetary limits. Larger commercial disputes often proceed through negotiated settlement meetings, mediation or the courts, with legal advice.

When independent support is worth considering

An advisor is most useful when the interruption is likely to last several months, when figures are complex or seasonal, when there are multiple sites or supply-chain links, or when you lack the time to manage a long claim while rebuilding the business. For a short closure with simple accounts, working directly with the adjuster and your own accountant may be enough.

Business interruption claims are long, numbers-driven and easy to under-value without careful preparation. expertdassure.com recommends reviewing your cover now and building a disciplined record the moment trading is disrupted.