Insurance questions? Click here to ask
Insurance Bureau of Canada/nl/Business/Risk Management/Business Interruption

Business Interruption Insurance

​​​Your ability to generate sales coul​d be threatened at any moment. With business interruption coverage, a business owner can collect the income he or she would have expected to generate were it not for the unexpected event.​​

Prepare for Interruptions

A bricks and mortar business can be disrupted by a flood, windstorm, earthquake or fire. 

Named Perils or All Risk?

A named perils business interruption policy covers losses caused by the perils listed in your policy. An all risk policy provides protection against loss caused by any risk that is not specifically excluded from your policy.

Limited or Extended Indemnity?

The indemnity period is the time period covered for loss of business. There are two basic forms of business interruption indemnities: 

  1. ​Limited (or earnings). This policy pays only until the damage is repaired or the property is replaced. As soon as your business resumes, the policy stops paying even if you haven’t regained your previous level of earnings. While a limited form policy is less costly than an extended policy, it may not provide adequate coverage for your business. Consider:
      1. ​​If you are forced out of business for several months, your competitors may snap up some of your customers. As a result, when your business starts up again, you may not be generating the same level of sales as you were before the shutdown.
      2. There may be limits on the amount of time your business is covered and the amount your insurance will pay in any one month. 
  2. ​Extended (or profits). This form continues to pay until your business resumes its normal, pre-interruption level, subject to the maximum period of indemnity listed in your policy. 

Additional Coverage      

Consider if you must remain operational during the period affected by damage. You may incur extra expenses – such as outsourcing work; temporary hydro, Internet and telephone connections; advertising; rentals or the cost of moving to a different premise – if you need to carry on business at another location.

Make Decisions Before Your Business is Interrupted 

The coverage you need depends on the exact nature of your business model. When considering additional coverage:

  • Speak to your accountant about the effects of an interruption to your business.
  • Discuss coverage options with your insurance representative. 
  • Be clear about your needs. Ask questions. 
  • Understand the coverage. Don’t sign anything too quickly. 
  • Ask around and get opinions from others who operate in the same industry.