Melbourne earthquake triggers business insurance questions

Business owners and entrepreneurs rocked by last night's earthquake in Melbourne could be forgiven if they started panicking about potential damages – but as it turns out they have no reason to fear.

Insurance experts say earthquake coverage is a standard clause in business insurance contracts. Unlike the Brisbane floods, which exposed all sorts of technicalities and left businesses in the dark, APEX Insurance Brokers chief executive Daniel Johnson says earthquake coverage is standard.

"It just tends to cover a higher excess," he says. "But, yes, it's a standard cover for all insurance."

"People tend to think of earthquake damage in terms of a building falling over. But coverage also extends to what we call "prevention of access". Your business may not be affected, but there are lots of effects like business interruption."

Eastern Victoria was rocked with a 5.2-magnitude earthquake last night at around 9pm, with the tremors felt as far as the western suburbs of Melbourne. Some businesses in the Moe area were hit, with pictures on the internet of a supermarket which sustained a fair amount of stock damage.

Apart from that, however, there were no serious incidents or injuries. But after a few years of major natural disasters, businesses could be forgiven for feeling a little edgy.

Insurance cover technicalities exposed during the Brisbane floods meant many businesses missed out on coverage. Some SMEs suffered major losses, including one member of the Smart50 which lost an entire warehouse worth of agricultural product.

But Johnson says earthquakes are a different proposition. If you've taken out some sort of business insurance policy, then you're covered.

"Unlike floods, which are something you have to specifically request cover for, the insurers have done the right thing here and have insurance for everyone. It just carries higher excesses because there's an accumulation risk.

"So businesses are covered... but you should always look at your policy and talk to your advisor if you have any questions."

This article originally appeared on SmartCompany.