Cyclone Narelle crossed the Western Australian coast in late March 2026 as a Category 3 system, bringing destructive winds and significant rainfall across the Exmouth region.
Wind gusts approached 200 km/h in parts of the North West, with hundreds of millimetres of rain recorded in a short period. Properties were damaged, infrastructure was disrupted, and many businesses were forced to close.
But beyond the immediate impact, events like this highlight a different question:
If your business was affected, would your insurance actually carry you through the recovery?
The reality of Building Sums Insured (BSI)
When a cyclone strips a roof, forces walls or renders a structure uninhabitable, the question becomes: what does it actually cost to rebuild this, right now, from the ground up?
It isn’t just about the cost of bricks and mortar; it’s about the demand surge. When an entire region requires repairs simultaneously, the cost of labor and materials spikes overnight.
Many clients are finding that their Building Sums Insured (often based on valuations from 2–3 years ago) simply do not cover today’s rates, particularly with the added requirements of current building codes and the high cost of debris removal in disaster zones. A building that was adequately insured in 2021 may be underinsured by 30% or more today.
Business interruption: where the real impact sits
For many businesses in Exmouth and the Coral Coast, the physical damage from Narelle, though serious, may ultimately be less damaging than the extended period of closure that follows.
Rebuilding in a remote regional location takes time. Trades need to be sourced and mobilised. Materials arrive on long lead times. Access roads were cut off for days after the storm.
Business Interruption (BI) cover is designed to bridge that gap, but only if it’s structured correctly.
The two variables that determine whether BI cover is adequate:
- Revenue figure: If the figure used to calculate your BI cover is based on turnover from two or three years ago, or doesn’t account for seasonal peaks like Easter and school holidays, the payout may fall well short of actual losses.
- Indemnity period (the length of time the insurer will cover your lost income): Twelve months is common. But in a remote regional town, following a major cyclone, full reinstatement of a commercial building can take eighteen months or longer. Once the indemnity period expires, the insurer stops paying, regardless of whether you have reopened.
For Exmouth’s tourism businesses, the Easter school holiday period is among the most commercially significant weeks of the year. Narelle struck with almost surgical timing, on the eve of that peak period.
A BI policy set on average annual revenue (without accounting for seasonal weighting) will understate the true loss. A 12-month indemnity period may expire before a damaged tourism property is rebuilt and fully operational.
The broader WA picture
Narelle was a significant and unusual event, the first cyclone in over two decades to affect all three of Australia’s tropical regions in a single pass. But it is not a once-in-a-generation anomaly.
The Bureau of Meteorology and climate scientists have noted that warming ocean temperatures in the waters off the WA coast are contributing to the conditions that allow cyclones to maintain intensity further south than historically observed. The Insurance Council of Australia has reported weather-related losses of $1.5 billion across Australia in 2025 alone.
For businesses in the Pilbara, Gascoyne, Mid West and even the Perth metropolitan area (which was put on alert as Narelle tracked south) the question is not whether a future weather event will affect your region. It is whether your insurance is built for the one that comes next.
What to review now
To ensure your business can survive the next major event, consider reviewing the following:
✓ Building Sum Insured (BSI): Ensure it reflects current rebuild costs, not historical valuations
✓ Business Interruption cover: Review both turnover assumptions and indemnity periods
✓ Loss of rent: Ensure your cover accounts for the total time it takes to get a tenant back in the building, not just the repair time.