How do I insure my business against the risk of natural disaster?

With the ABC reporting that climate change could triple the frequency of natural disasters in Australia, it's worth considering how you can reduce the risk this could pose to your business. While it's impossible to accurately predict the business risk of a natural disaster, having insurance can reduce the negative impact of some events.

Whether you lease a shopfront, work off-site using portable tools or run your business from home, just about every small business will be affected by a storm, fire or other natural disaster at some time – directly or indirectly.

If you're in a disaster-prone area it’s worth conducting a risk assessment of your business. Consider the following:

  • What events are most likely to affect your business in its current location? How can you reduce the damage?

  • Are your employees in risk-prone areas? What happens if they can’t get to work?

  • Do you risk losing all of your stock in an event because you keep it in one place? Could you rent storage premises in a less risk-prone location?

  • Do you backup and securely store business documents and data off-site in case you can’t access your usual business premises?

  • How would you run your business if you were unable to access your usual premises?

  • For how long could you continue to run your business without key equipment?

According to research in the Disaster Recover Journal (Volume 13, Issue 2) after a natural disaster occurs, up to half of small businesses that suffer major losses will fail – within weeks or the following two years – so it’s worth considering the value of business insurance. At the very least, consider up-to-date cover for damage to your property, contents and stock. Don’t forget your commercial vehicles and any portable tools and equipment.

In addition, AAMI’s Back in Business option can help you to recover from a natural disaster if your trading is put on hold because your property is damaged or you've lost stock and contents. This type of business insurance, often called business interruption, covers you for loss of turnover and enables you to meet ongoing and additional business expenses, ultimately keeping your business afloat. If you need to use temporary premises to continue operating, business interruption insurance will also cover your relocation and rental costs.

Don't forget to regularly review your business insurance to make sure it's adequate, especially if your business grows.

Following a natural disaster, here's what to do:

  • Return to your business premises if safe to do so.

  • Take photos of the damage for your insurer and keep damaged items (unless they’re a safety or health hazard).

  • Call your insurer to arrange emergency repairs to your property and equipment, and consider relocating to temporary business premises if needed.

AAMI specialises in business insurance for small businesses, with simple online quotes and 24/7 support for claims.


Insurance is issued by AAI Limited ABN 48 005 297 807 AFSL 230859 (AAI) trading as AAMI. Read the relevant Product Disclosure Statement before buying this insurance. This advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it.