Compare Business Interruption Insurance

The cost of business interruption insurance in Canada can vary significantly based on factors such as the size and type of business, location, coverage limits, and specific risks. Rates start at $100 per year. Premiums typically range from a few hundred to several thousand dollars annually. It is usually a small amount compared to the fixed costs of a business interruption, which include wages, rent or mortgage payments, taxes, relocation costs, etc.

Yes, business interruption insurance usually covers certain expenses related to your business, including rent or lease payments, as part of its coverage. However, the specifics may vary among insurance policies, so it’s important to carefully review the terms of your policy.

Business interruption insurance is a type of coverage that helps businesses recover financial losses resulting from unforeseen events that disrupt normal operations. These events can include natural disasters, fires, equipment breakdowns, or other circumstances that lead to business income loss. Any business can be disrupted or forced to suspend operations due to flood, windstorm, fire or earthquake. Depending on your company’s needs, there are two types of business interruption coverage: a policy covering events that are specified in the contract and a comprehensive policy which offers more extensive protection against business interruption.

Business interruption insurance typically covers lost income (based on prior financial records), ongoing operating expenses such as rent, utilities, and employee salaries, temporary relocation costs, taxes and loan payments due during the covered period. It may include expenses related to business recovery efforts, such as marketing and advertising.

To obtain business interruption insurance in Canada, use an online comparison tool to compare prices. Then, you should contact an insurance provider or broker specializing in commercial insurance. They will assess your business’s specific needs and provide you with policy options.

The amount of business interruption insurance you need depends on factors like your business’s size, industry, location, and risk exposure. A rule of thumb is to use your business’s gross earnings and projections to estimate future profits and determine the right amount of coverage. Ask your broker to help you calculate the right amount of coverage. It’s always advisable to conduct a thorough risk assessment to determine the appropriate coverage limits.

The duration of business interruption insurance coverage is determined by the policy terms and can vary. Basic business interruption insurance usually provides a 12-month compensation period, but your business may need more time to get back on its feet. For example, you might be able to reopen after a couple of months, but your activities may not resume at full speed and your revenue will take longer to come back to its former level. It is possible to choose a prolonged compensation period. Coverage should ideally begin when the business interruption event occurs and continues until your business is back to its pre-loss level of operation.

Commercial general liability insurance primarily covers liability claims related to bodily injury or property damage and does not typically include business interruption coverage. Businesses therefore need to purchase separate business interruption insurance to protect against income loss.

Contingent business interruption insurance is a specialized type of coverage that protects businesses from financial losses caused by disruptions to the operations of their suppliers or customers. It can be valuable for businesses that rely heavily on key suppliers or clients. Say, for example, that you are a manufacturer of knit goods and your supplier of synthetic wool suffers a fire, which shuts down their operation. You can no longer get materials from this supplier and your business sustains loss of income as a result. Insurance can help you.

In Canada, when a business receives lost revenue through a successful business interruption claim, it has to pay taxes on this income. Business interruption insurance proceeds are generally considered taxable income. However, specific tax treatment may vary based on factors such as the nature of the loss and the tax laws in your province.

Yes, business interruption insurance usually covers payroll expenses as part of its coverage. It helps ensure that your employees continue to receive their salaries and benefits during the period of business disruption.

Whether business interruption insurance is worth it depends on your business’s specific circumstances and risk tolerance. For businesses vulnerable to income loss due to unexpected events, such as natural disasters or equipment breakdowns, business interruption insurance can provide valuable financial protection and peace of mind. It’s advisable to evaluate the potential risks and benefits in the context of your business operations.