COVID-19: Canadian home, auto and business insurance information

These are uncertain and challenging times. With COVID-19 causing global concern, we understand many Canadians will have questions related to insurance. On this page you’ll find answers to FAQs about insurance and a brief Q&A document outlining how business interruption policies work.

Updated: October 13, 2020

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Business Insurance Q&A

Commercial insurance is complex and specialized, which makes it important that you speak to your insurance representative if you have any questions or need clarification about your coverage. 

Is COVID driving up my insurance rates?

The cost of insurance was increasing across a number of sectors prior to the outbreak of the Covid-19 pandemic. The pandemic has compounded the existing insurance industry challenges and put further strain on the affordability and availability of insurance. Since the beginning of the pandemic, insurers have supported Canadians, returning hundreds of millions of dollars to commercial clients – with over 80% of that amount specifically designated for small business. Insurers are continuing to work with their clients to support them through this unprecedented and challenging time. For more information on the commercial insurance market, click here.

Business owners with insurance questions should contact their insurance representative or call IBC’s business insurance helpline at 1-844-2ask-IBC for help.

Will my standard business policy or business interruption policy cover me for interruptions due to COVID-19?

  • Generally, commercial insurance policies and traditional business interruption policies do not offer coverage for business interruption or supply chain disruption due to a pandemic such as COVID-19. 
  • Some organizations may have purchased specialized contingent business interruption coverage, stand-alone business interruption coverage and supply chain disruption coverage which may be triggered as a result of the World Health Organization's declaration of a pandemic. 
  • Commercial insurance is complex and specialized and specific to your business which makes it important that you speak to your insurance representative if you have any questions or need clarification about your coverage. 

How does business insurance work?

Property insurance for businesses is designed to protect the physical assets of a business against loss and/or damage from a broad range of causes. There are two basic policy types:   

  1. Named perils – covers only loss and/or damage caused by perils specifically listed in the policy, subject to exclusions. Loss and/or damage caused by any other peril is not covered.
  2. Comprehensive – covers loss and/or damage caused by any peril, unless specifically excluded.

What is business interruption (BI) coverage?

BI coverage is an add-on to an existing business insurance policy. In the event of a business temporarily needing to shut down, BI covers continuing expenses or replaces lost profits. There are three types of BI policies: 

  1. Gross earnings policy, which pays only until property or damage is replaced or repaired, or stock is replaced
  2. Profits form policy, which continues to pay until a business resumes its normal, pre-interruption level (subject to policy limits)
  3. Extra expense policy, which is designed for businesses that can remain operational during periods affected by loss and/or damage.

How does BI insurance work?

BI policies are not standardized and include many variants, but most contain language indicating that the insurer will pay for the actual loss of “business income” due to the “necessary suspension” of operations during “the period of restoration.” A number of concepts and nuances come into play, including:

  • Physical damage requirement: Most policies require proof that the insured premises sustained physical damage (for example, from fire, heat, flooding or firefighting efforts) that was covered under their property policy, which caused an interruption that resulted in a loss of business income. A business that is interrupted due to the loss of data or a loss of utilities may not have sustained a physical loss. (There is separate utility loss coverage.) 
  • Period of restoration: If BI coverage is triggered, a significant issue is defining the period of indemnity or, as some policies refer to it, the period of restoration. Most policies will pay business income loss through to the point that the business is restored or when the coverage expires (usually 12 months from the beginning of the interruption). 

Consumer Relief Measures

To help Canadians cope with the financial impact of COVID-19, Insurance Bureau of Canada (IBC) member companies are offering substantial consumer relief measures. For consumers whose driving habits have changed significantly, IBC member companies are offering reductions in auto insurance premiums to reflect this reduced risk. IBC expects this could result in $600 million in savings to consumers. The reductions will continue for the next 90 days. Additionally, insurers have supported Canadians and businesses who are most adversely affected by honouring requests to defer premiums. Thousands of Canadians have had their premiums deferred.

Insurance customers whose driving habits have changed significantly or who are facing financial hardship as a result of the pandemic should contact their insurance representative. As it relates to savings on auto insurance premiums, savings will vary depending on individual driving habits.

Many insurers have transitioned their employees to work from home, and insurers ask for your patience as service levels may be strained.

In addition to adjusting premiums for drivers, IBC member companies have also committed to the following measures to help Canadians, which will also apply for the next 90 days:

  • Explore flexible payment options for consumers who are in a vulnerable position or facing financial hardship as a result of COVID-19;
  • Waive the NSF fees they would have charged if you have insufficient funds to cover your premium. You remain responsible for any fees your bank may charge you; and
  • If you are temporarily using your car or home differently (for example, you may be using your car to commute to work instead of taking public transit, or you may be working from home) it will not affect your premium or your ability to make a claim.

Insurers are also working with small business and commercial clients to help businesses manage their costs.

Insurers are supporting communities across the country, and some have made substantial donations to help those impacted.

Consumer FAQs

Why would insurers increase rates during a crisis?

Many of the approved rate changes were submitted by insurers and approved by their respective provincial regulators late last year or early this year. In many cases, implementation began months before the states of emergency were declared throughout the country.

However, insurers understand that this is a challenging and uncertain time and want to help alleviate some of the financial burden for the most vulnerable. They recognize that many drivers are no longer commuting or using their vehicles as regularly, and their premiums should reflect the reduced risk.

If your driving habits have changed significantly, or if you are facing financial hardship as a result of the pandemic, contact your insurance representative. Savings will vary based on individual driving habits and policy requirements.

How long does it take to get rates approved?

After submitting a rate change proposal to the provincial regulator, insurers must wait roughly one to two months before those rates are approved. After that, consumers are sent renewal notices at least one month before their new proposed rates come into effect. In all, it takes at least 90 days from rate change submission, to approval, to when consumers pay the new rates.

90 days is the earliest the new rates would come into effect for a policyholder. In the vast majority of cases, the new rates will come into effect several months after the submission and rigorous approval process. For example, any rate increase that you might be seeing now on your renewal may have been approved and set 11 months ago.

What can consumers do to lower their premiums?

Insurers agree that auto insurance should be more affordable. In the short term, to help those dealing with the COVID-19 pandemic, insurers are offering substantial consumer relief measures. Consumers whose driving habits have changed significantly or who are facing financial hardship as a result of the pandemic should contact their insurance representative. As it relates to savings on auto insurance premiums, savings will vary depending on individual driving habits. In the long term, insurers are advocating for reforms to make auto insurance more affordable.

Consumers should shop around – it is proven to help drivers find better rates. But it is not the only way. For more information on what you can do to save on your insurance, please see Insurance Buying Tips – Cost Control