Fire insurance and business interruption insurance aren't the same thing
Property (fire) insurance covers your physical assets — fit-out, furniture, stock, equipment — damaged by fire, flooding, or similar events; the insurer repairs or replaces them. But while the shop is closed, you have no revenue, yet rent, salaries, and management fees still have to be paid — fire insurance doesn't cover that. That's exactly the gap business interruption insurance is built to close. For the full coverage breakdown, see our complete Property + Business Interruption guide.
What actually gets covered
| Coverage item | In plain terms |
|---|---|
| Loss of net profit | The profit you would have earned during the closure but didn't |
| Fixed overhead | Rent, management fees, staff salaries — costs that keep running even with no business |
| Extra expense | Costs like renting temporary premises to reopen faster |
If a typhoon forces you to close, do you still have to pay staff?
Under the Labour Department's Code of Practice in Times of Adverse Weather and "Extreme Conditions", employers should not withhold wages, annual leave, or rest days to "make up" for a typhoon or black rainstorm closure. In other words, even with the shop shuttered, that wage expense keeps running — which is exactly the kind of fixed overhead business interruption insurance is meant to cover. For a broader look at employers' statutory obligations, see our complete Employees' Compensation guide.
The trap: business interruption cover usually can't stand alone
Business interruption claims are generally triggered by a closure that follows "material damage" covered under a fire/property policy — a fire, a flood. A shutdown purely from traffic paralysis or staff being unable to get to work usually falls outside standard cover. Before you buy, confirm exactly which trigger events the policy actually names.
How long does a closure need to last before it "counts"? Indemnity periods and waiting periods explained
The indemnity period is how long the policy is willing to pay out for — commonly ranging from 3 to 24 months in the market, with 12 months being enough for most SMEs. A 24-month period is worth considering only if your business is more complex — for example, the premises need a full renovation or the supply chain needs rebuilding before you can reopen. Policies also typically include a waiting period (a form of excess) — cover only kicks in once the closure exceeds a set number of hours or days. The exact threshold varies by policy, so don't assume they're all the same — ask for the specific terms before you sign.
A real 2023 case: how big the financial hit from extreme weather can be
In September 2023, Hong Kong was hit by the "Black Rainstorm of the Century" and Typhoon Saola in quick succession — together the two events generated roughly HK$1.9 billion in insurance claims industry-wide. That figure isn't from a single policy, but it illustrates how large the financial impact of one extreme weather event can be for businesses without a plan in place.
Three questions to ask before you buy
- How long an indemnity period do I need? — 12 or 24 months, depending on how long it would realistically take your business to get back on its feet.
- How is the sum insured calculated? — Usually based on projected net profit plus fixed overhead; picking a number at random rarely gives you enough cover.
- What events actually trigger the policy? — Fire and flood are standard, but machinery breakdown or malicious damage may not be automatically included — confirm each one.