icon

Compare Business Interruption Insurance Quotes

Find the best business interruption insurance coverage in Canada. Compare and get the best rates.

Image of Jessica Mach 3.JPG

Written By Jessica Mach

Freelance Writer
Image of Shivani 2.png
Reviewed By Shivani Kaul
Content Manager

Updated

What is business interruption insurance?

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.

What does business interruption insurance cover?

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:

  • “Gross earnings” policy: the insurer will pay until damage to your property or inventory is repaired or replaced. This type of coverage is useful if your products become unsellable but you want to maintain cash flow.
  • “Profits form” policy: the insurer will pay up until your business is able to operate at the same level it did before the disaster occurred.
  • “Extra expense” policy: this option is specifically for businesses that are able to continue operating after a covered disaster. If the regular location of your business is in the process of being repaired, for example, the insurer could pay expenses related to moving operations to a temporary location.

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.

Is business interruption insurance mandatory in Canada?

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.

Who needs business interruption insurance?

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?

  • Undocumented income that is not listed in your financial records
  • Pandemics, viruses, or infectious diseases (such as Covid-19)
  • Terrorism

To find out if less commonly-covered events like floods, earthquakes, or pollution are covered, speak to your insurance company or broker.

How much does business interruption insurance cost?

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.

Factors that affect your business interruption insurance rates

When calculating rates for this type of insurance, your insurance company will consider a number of factors. The main ones include:

  • The value of your commercial property: Business interruption insurance may cover your rent or the cost of temporarily relocating to a new venue in the event that your commercial property is damaged. To make sure the amount they pay out can cover these costs, insurance companies may consider the value of your commercial property to determine your premiums. If your business is located in a building with high rents, for example, your annual rates may be higher.
  • Your revenue: Since this type of insurance typically covers revenue you lose when an insured event forces you to pause operations, your insurer will likely charge you a higher rate if your revenue is high. Again, the goal is to make sure they can adequately make up for your losses in the aftermath of an emergency.
  • The risks in your industry: Insurers may impose a higher premium on businesses that are at high risk of damage. For example, if you own a food business that typically uses ovens or stoves, you’ll likely be charged more than a notary.
  • Your coverage limit: If you want a higher coverage limit than what’s offered through your commercial property insurance policy, your premiums will likely go up.

How business interruption insurance can protect your business

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:

  • Scenario 1: David owns a sports equipment store in Vancouver. One morning, David arrives at the store to find the windows broken and approximately $8,000 of equipment missing. He must replace the equipment and keep the store closed for a few days while the windows are being repaired.
    Outcome: David’s business interruption insurance covers the income he lost due to the unexpected store closure. Without this coverage, the repairs and equipment replacement would have cost about $10,000.

  • Scenario 2: A kitchen fire damages Rebecca’s dine-in sandwich shop in Toronto, forcing her to temporarily move the shop’s operations to a different storefront down the street.
    Outcome: Rebecca’s business interruption insurance covers the cost of renting out the temporary storefront, utility fees, and income lost as a result of the fire, which would have cost her $30,000 to pay out of pocket.

  • Scenario 3: Colin owns a popular specialty grocery store in Montreal. A severe windstorm damages the property, preventing him from operating the store until it can be restored.
    Outcome: Colin’s business interruption insurance covers the income he loses as a result of temporarily closing down his store, as well as rent and utilities for the property. Without this insurance, he would have lost $50,000 as a result of the storm.

What people say about our quotes

Rating stars

Based on 6,379 reviews

 Trustpilot logo

How to get the cheapest business interruption insurance quotes

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:

  • Compare quotes - The easiest way to save money is to compare business interruption insurance quotes on RATESDOTCA. If you're looking to get business interruption insurance, compare quotes for the coverages you're considering to see which one is the cheapest to insure.
  • Increase your deductible - By increasing your deductible, you will have pay a designated amount out of pocket if you file a claim. The more you agree to pay, the lower your premium will be.
  • Bundle your personal and business insurance - By bundling your business insurance with business interruption insurance, you can claim some discount from your insurance provider. Insurance companies can offer you a good discount if you have more than one insurance product with them.
  • Know what coverage you need - Review your coverage each year and cancel any add-ons you no longer need.
  • Pay annually - If you can pay your premiums annually rather than monthly, you can often save a bit. Some insurance companies offer a discount on the payment of annual premiums upfront.
  • Multi-business discounts - Like multi-product discounts, multi-business discount allow you to insure more than one business under the same insurance company to get a discount on your premiums.
  • Safety features - Installing approved anti-theft devices or safety features in your business set up or office can lead to discounts. Safety devices like fire alarm, carbon alarms, sprinklers, choosing your store or office location in a low crime area, and such decisions can help protect your business from unwanted elements. Check eligibility before you purchase and install any such devices.

Frequently asked questions about business interruption insurance coverage

Have more questions, we got them answered:

What is indemnity period and what are the length of the durations?

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.

How do insurers determine the amount of business interruption insurance pay out?

To calculate your claims, insurance companies will weigh multiple factors. These can vary depending on the specifics of your policy, but they typically include:

  • Profit - Insurers require a declaration of your profits when you apply for business interruption insurance. Generally, they will take this number into account when you submit a claim.
  • Your indemnity period - The length of your indemnity period will factor into the size of your payout. If your indemnity period is 36 months, you’ll be entitled to more than if this period was 12 months.
  • Other expenses - Your insurance company may also consider the cost of wages, relocation expenses, taxes, and loan payments to calculate your claim amount.

What kind of proof/documents will be needed when filing business interruption insurance?

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:

  • An itemized list of damaged or missing items that include as much detail as possible
  • Documents that demonstrate the value of your damaged or missing items, such as receipts, invoices, purchase orders, proof of purchase, and warranties
  • Photos of damaged or missing items
  • Photos of property damage
  • Any damaged items that do not pose a threat to your health or safety. These items should not be thrown out or moved until you document them and confirm with your insurer you are able to remove them from your premises
  • Receipts related to repairs and cleanup costs
Jessica Mach 3.JPG
Jessica Mach ,
Freelance Writer

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.

Experience
  • Business Loans
  • Personal Finance
Education
  • McGill University

Recent News Articles

Professional vs. general liability insurance: What coverage does your business need?
Comprehensive business liability insurance, including general and professional coverage, protects against physical risks and service-related errors. Here's how it works.
5 mins read
How to pay your mortgage after a job loss
Could you pay your mortgage after a job loss? Here’s how to protect your ability to pay in a worst-case scenario.
3 mins read
Should you pay your insurance premium annually or monthly?
For some, making a full payment annually works best, with discounts to be had. For others, monthly payments is more manageable. There are pros and cons to each.
3 mins read

Subscribe to our newsletter

Stay on top of our latest offers, relevant news and tips!

Thanks for joining!

You'll be hearing from us shortly - stay tuned.