Why Toronto Businesses Need Business Interruption Insurance

July 4, 2024 / 5 mins read

What if you are forced to temporarily close your Toronto business due to fire or vandalism? What if a natural catastrophe affects one of your suppliers and your business is forced to close for an unspecified period of time? Do you have business interruption insurance to financially protect you?

Business interruption insurance provides financial support for your Toronto business when it has to close temporarily after a covered loss. Could your business afford to be closed due to unforeseen circumstances? Would you be able to pay all your expenses, including payroll, without business interruption insurance? The answer is often no.

If your business is in Toronto, Greater Toronto Area (GTA) or anywhere in Ontario, your Western Financial Group business insurance expert will give you top-notch commercial insurance advice and ways to save on your insurance.

What is business interruption insurance?

Business interruption insurance helps recover lost business income and ongoing business expenses while your Toronto small business is temporarily closed.

This type of insurance usually can’t be purchased as a standalone policy. Business interruption insurance is included under your commercial property insurance, or as an add-on to your business insurance policy.

What does business interruption insurance cover?

There are a number of losses that can force your Toronto small business to shut down. Some examples are:

Damage to your equipment from fire or vandalism
A major reduction in revenue due to a client/supplier facing losses of their own
A disruption in your supply chain

Business interruption insurance can help with these expenses:

Payroll
Rent
Utilities
Property taxes
Alarm monitoring
Relocation of your business

Most business interruption policies respond after 12 or 24 hours of consecutive closure of your Toronto business.

How business interruption insurance can help your Toronto small business

A kitchen fire has forced the closure of your Toronto restaurant for repairs. Your business interruption insurance covers the rent while the restaurant is closed.

Business interruption insurance also helps cover your employee payroll and utilities while your restaurant is being renovated after the kitchen fire.

Without business interruption insurance, would you have enough money set aside to rebuild your Toronto business if it experienced a major fire?

Who needs business interruption insurance?

Anyone who owns a business in Toronto should consider business interruption insurance, including businesses running at a loss as well as non-profit organizations. Even if you are losing money, you still have expenses to pay.

Examples of Toronto businesses that need business interruption insurance:

Retail shops
Restaurants
Salons
Offices
Manufacturers

What doesn’t business interruption insurance cover?

Business interruption insurance usually does not cover:

Pandemics, viruses, or infectious diseases
Flood, earthquake or pollution damage
Terrorism
Income that is not listed on your financial records
A government-mandated business closure

How much does business interruption insurance cost for Toronto businesses?

There isn’t one set price for business interruption insurance for Toronto businesses. Every business is different.

The industry your business is in, your annual revenue and the value of your business’ commercial property, and any past claims would be considered in calculating the cost of your business interruption insurance coverage.

Talk to your Western Financial Group business insurance expert about business interruption insurance coverage for your business.

What is the indemnity period under business interruption insurance?

This refers to the length of time for which compensation is payable under a business interruption policy. It’s usually 12, 24, or 36 months. The indemnity period may be extended to provide additional coverage beyond the length of time it takes to restore your Toronto business.

What other kinds of insurance do Toronto businesses need:

Commercial vehicle insurance is important: When you or your employees are on the road travelling for work, commercial vehicle insurance may cover your vehicles in the case of an accident. Your personal vehicle insurance will not cover you in the case of an accident if the work is related to your Toronto business.

Here’s an insurance checklist for your Toronto small business:

Do you have the best Toronto business insurance rate that suits your work?
Do you have the right amount for your deductible and regularly review it to make sure it’s the right amount for you?
Are you or your employees using personal vehicles for work?

What do I do if my Toronto business has an insurance claim?

Contact your broker immediately after any business-related mishap. Waiting to file a claim can confuse insurers about the severity of the damages to your business.
Know your policy so that when you contact your broker you are familiar with what will be covered or not.
Document the damage. Take photos right away and write down what happened.
Do not throw away damaged goods after taking photos. Keep the physical evidence so that your adjustor can see it.
Do not invite lawsuits. Don’t say anything that could be used against you, especially if you aren’t sure what happened.
Be honest about what your damaged property is worth. Damaged commercial property is generally valued according to its actual cash value or replacement value.

Western Financial Group has licensed BUSINESS INSURANCE EXPERTS to get your Toronto business the right business insurance package, including business interruption insurance coverage. Our experts are available now to help you navigate the commercial insurance journey to protect your Toronto business.

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