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Updated
Business interruption insurance is not a type of coverage you can get on its own. Business owners typically obtain this type of coverage in one of two ways: it automatically comes with their commercial property insurance policy, or they choose to add it to such a policy as a rider.
The purpose of business interruption insurance is to provide coverage for net income lost as a result of an insured disaster. It may also cover employee wages, loan payments, operating costs, and expenses related to moving your business to a new location.
Business interruption insurance is not standardized. But most policies have the same general framework: the insurer will pay for the income your business loses when an insured disaster forces you to suspend operations and focus on repairs instead.
There are generally three types of business interruption insurance you can choose from, with varying levels of coverage:
Depending on your specific policy, business interruption insurance may also cover operating costs like mortgage, rent, and lease payments; electricity; internet and telephone expenses; employees’ wages; and taxes and loan payments.
Business interruption insurance is not mandatory in Canada.
However, it is highly recommended. An unexpected disaster could compromise your business’ ability to generate revenue at any time, and getting back on your feet could take more time than you want or anticipate.
Opting for this type of insurance coverage can help cushion the financial blow of an unexpected disaster, and provide much-needed aid during an emergency.
This type of insurance is recommended for all business owners to protect against financial losses in the case of a covered disaster. Even the most careful business owner can face an unexpected disaster, and the timeline for restoring your business to the point where it can operate normally may be long. Expenses related to restoring your business can also add up quickly.
What is not covered by business interruption insurance?
To find out if less commonly-covered events like floods, earthquakes, or pollution are covered, speak to your insurance company or broker.
The exact cost of business interruption insurance will vary depending on several factors, but premiums typically start at $100 per year, and can reach into the thousands.
Remember, however, that you do not have to buy the first policy you come across. Many companies offer business interruption insurance with competitive rates, whether that coverage is automatically included with your commercial property insurance policy or you buy it as a separate add-on. Comparing rates from different companies is the best way to find the coverage that best caters to your business’ unique needs — at the lowest price.
When calculating rates for this type of insurance, your insurance company will consider a number of factors. The main ones include:
Let's take a look at these different business interruption scenarios that could happen to you and how you could protect your business with the right insurance coverage:
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Finding the cheapest business interruption quotes should not be as complicated as it may seem. We at RATESDOTCA, can guide you through ways to save on business interruption insurance premium. But cheap insurance does not always mean the best coverage for you. Always reach out to an insurance professional to discuss what could be the best coverage for your needs. Here are a few ways to consider to get cheapest business interruption insurance quote:
Have more questions, we got them answered:
Your indemnity period is the set length of time during which you will receive payment for a business interruption insurance claim. Indemnity periods are typically 12, 24, or 36 months, but can typically be extended beyond the so-called “restoration period” — i.e., the stretch of time it takes to repair your business and have it operating normally again.
To calculate your claims, insurance companies will weigh multiple factors. These can vary depending on the specifics of your policy, but they typically include:
When filing a claim, you need to be able to support and explain to your insurance company all the expenses incurred as a result of the disaster. Taking the time to carefully document any damage, and explain how that damage has financially impacted your business and ability to generate revenue, can help you maximize your claim and avoid disputes with your insurer.
The following things can help support your claim:
Jessica Mach is a freelance writer for RATEDOTCA. She is Canada Editor - Law for Key Media’s legal publications, and previously reported on US labour policy for Law360, Law.com, and the Los Angeles Daily Journal. As an early member of LowestRates.ca's editorial team, she covered personal finance and astrology.
She graduated from McGill University with a Master of Arts degree in art history.
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