Ontario Business Interruption Insurance

Business Interruption

Protecting your business and income.

Ontario business interruption insurance

Business Interruption Insurance

Commercial property insurance covers loss of property, equipment or stock by an insured physical loss. The coverage does not provide protection if damage to business property results in a loss of earnings or income. This can leave businesses that have had an insured loss with large financial losses from their continuing expenses.

If you have a covered loss at your business, you may have to shut down while repairs are done. Your expenses will not shut down though and you will still have expenses such as taxes, rent, loan payments, utilities, or salaries to continue to pay. This could make or break a business while they are temporarly closed.

Business interruption insurance reimburses policyholders for the difference between expected normal income and the income earned during the period of interruption during an insured loss.

Types of Business Interruption

As with most things in life, there are choices when it comes to your business interruption coverage. To simplify the process a little bit, we will only discuss these at a high level as business interruption coverage is considered one of the more complicated insurance topics in commercial insurance. You should always have a qualified experienced insurance broker walk you through the proper coverage for your specific needs.

Different types of business interruption insurance include:

Gross Earnings Coverage
Gross Earnings Forms are suitable for businesses that are able to immediately start generating an equivelant sales volume to the time before the loss occurred. Once the business reopens, the business interruption money stops.

Profits Form
If your business is vulnerable to business interruption and is dependent on future sales, the profits form policy might be the choice the broker suggests for you. This form continues to pay until your business returns to its normal volume pre-interruption up to the policy limits.

Extra Expense Insurance
Some businesses simply cannot close for any period of time. This coverage is for businesses that must operate regardless of cost, or they could lose their markets completely. If that description sounds like your business, this coverage is something you may want to inquire about with your broker.

Actual Loss Sustained
Actual Loss Sustained is the most favourable option to a lot of brokers as it covers the actual loss sustained by the insured as a result of the insured loss. This coverage is very similar to the Profits Form above, but it pays up the actual loss sustained.

It simply can't be stated enough, that you should have conversations with your broker and your accountant to figure out what your business will go through if you have a covered loss that results in your business temporarly closing. This topic in insurance is extremely difficult to master, and it is important that your broker has the experience and knowledge to walk you through the proper coverage for your business.

Business Interruption Terms

Insurance terms are not the same as accounting terms

Due to the fact that insurance terms are not the same as accounting terms, we have put a little "cheat sheet" on this page to help businesses get the right numbers to their brokers.