How Does Business Interruption Work in Canada

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Worried about business interruption? A Toronto insurance broker can help…

Risk happens. Consequently, protecting your Toronto business is vitally important.

We know this. Firstly we know this because after a fire, flood or windstorm, your business needs to have the right property insurance coverage in place to repair or replace your insured building, equipment and/or inventory.

Secondly, when a worst-case scenario happens, your business may not have sufficient funds to keep paying your ongoing expenses (aka as standing charges). Moreover, your business expenses may include some or all of the following:

  • Property taxes
  • Ongoing utility costs even if it’s just for hook up
  • Payroll
  • Vehicle, equipment and/or other loans or lines of credit
  • Advertising expenses
  • IT expenses
  • Ironically…insurance costs
  • Employee benefits
  • Telephone & cell phone
  • Internet
  • Ongoing maintenance

It’s inevitable that more often than not, risk happens when you least expect it. This is why it’s vitally important for GTA organizations to ask their Toronto insurance broker “How does business interruption insurance work?”.

Worst case scenarios happen

Business interruption is no joke. It’s up to you to learn more about what can and will be covered when a worst case scenario happens. Above all, business interruption is an important foundational coverage for any Canadian organization.

Business risks can and do occur when you least expect it. We how to align business interruption coverage to best address the specific risks your organization faces.

Value, options and knowledge are what you can expect when you work with a Toronto insurance broker who exclusively delivers commercial insurance products, services and options. We know how to find the best business interruption options in the marketplace. At ALIGNED, we are in this together.

Insights 101 | Business interruption Toronto commercial insurance

Certainly, anyone or a combination of the previously noted business expenses can make continuing operations painful. Expenses add up and if your business no longer has access to operate in its physical location, it may not be possible to continue. This is the inherent value of business interruption.

Thankfully, your Toronto insurance broker can help. Specifically, experienced ALIGNED commercial insurance brokers.

Our expert business insurance brokers understand how important it is to match your specific risk exposures with the best possible coverage options.

With the best business interruption coverage you can have the previously noted expenses and even your profits paid for periods of 12 to 24 months. This can happen through an appropriately structured commercial property insurance policy that includes business interruption insurance.

What to know about business interruption

Meanwhile, when a business is forced to temporarily close, traditional property insurance alone does not cover a move or a loss of income. This is the unique value of business interruption.

Commercial insurance Toronto | 4 ways business interruption works

This coverage enables you to minimize potential damage to your bottom line. Here’s what you can expect when business interruption is among your commercial insurance Toronto coverages.

  1. Coverage for the expenses of operating in a temporary location while repairs to your insured permanent location are completed.
  2. Coverage for the profits that your insured business would have earned, based on previous financial records, had the disaster not occurred.
  3. Compensation for lost income if your business must vacate its premises as a result of disaster-related damage that is covered under your property insurance policy.
  4. Coverage for business operating expenses such as utilities that must be paid even though your commercial operations temporarily cease.

The idea of losing a property to fire or water damage is a frightening thought for any business owner. Likewise, in the event that fire or water damages or destroys your facility, ideally you will move operations a new location while repairs are being made. In short, this is why business interruption is so vitally important for your business, regardless of where you are located.

In depth | Business interruption & annual values

All too frequently, companies with a manufacturing income statement report lower values than necessary. The gross profit after reduction for cost of goods manufactured is generally lower than the gross profit that should be reported for business interruption purposes, because the cost of goods manufactured includes fixed costs such as rent and depreciation.

Experts confirm that business interruption coverage is not fully understood by all business owners and accountants.

For instance, when declaring annual values, this lack of understanding may lead to mistakes such as:

  • Only insuring for the net income of the business
  • Failing to insure all of the fixed and semi-variable expenses of the business
  • Only insuring for the net income of the business
  • Not insuring “non-cash” expenses of the business, such as depreciation

To sum up, business risks can and do occur when you least expect it. We how to align business interruption coverage to best address the specific risks your organization faces.

This is just one of 18 reasons why our team of Canadian commercial insurance brokers focus exclusively on meeting the needs of business. We are in this together.

We only work with top Canadian insurance companies. Our brokers know the marketplace. We’ll search the market and find you the best value and options in Toronto commercial insurance. We’re ALIGNED.

Choice. Value. Options. ALIGNED.

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