SIMPLE GUIDE TO BUSINESS INTERRUPTION INSURANCE

SIMPLE GUIDE TO BUSINESS INTERRUPTION INSURANCE

Business interruption is the top risk for Canadian companies in 2025, according to Allianzโ€™s 2025 Risk Barometer. When planning budgets for a new year and reviewing insurance policies, many business owners prioritize protecting their physical assets – such as property, inventory, and equipment. But they often overlook one of the most critical forms of protection: coverage for lost income when operations are disrupted. Whether caused by a natural disaster, supply chain issues, or an unforeseen event, a disruption can leave your business vulnerable. Without proper coverage, you risk not only the immediate loss of revenue but the long-term financial stability of your business. 

What is Business Interruption insurance

Business Interruption (BI) insurance, also known as Business Income insurance, acts as a vital safety net for your company’s financial health. This coverage helps replace lost income and covers ongoing expenses when your business cannot operate due to a covered peril, such as: 

  • Fire or severe weather damage 
  • Extended power outages 
  • Equipment breakdown 
  • Supply chain disruptions 
  • Natural disasters 

What does Business Interruption insurance typically cover? 

  • Lost net income: The revenue your business would have earned during the shutdown period. 
  • Fixed costs: Ongoing expenses like rent, utilities, and taxes. 
  • Employee payroll: Wages for employees during the shutdown. 
  • Loan payments: Coverage for ongoing debt obligations. 
  • Temporary relocation expenses: If your business needs to move temporarily due to the disaster. 

Additionally, Extra Expense coverage helps cover costs above and beyond regular operating expenses, allowing businesses to minimize disruption and resume operations more quickly.

Key Questions To Ask Your Insurance Broker 

Your insurance broker is an essential partner in ensuring that your Business Interruption coverage is adequate for your needs. To make the most of your partnership and ensure your business is well-protected, here are some key questions to ask: 

 

1. Is my current business valuation up-to-date? 
Ensuring your business valuation is accurate is crucial for determining the appropriate level of coverage. Ask your broker if any recent changes in your business (such as revenue growth or equipment upgrades) might require adjustments to your coverage. 

2. Are my coverage limits and deductibles adequate?
Review your coverage limits to ensure they reflect your current operations. Also, ask about your deductibles to make sure they align with your budget and risk tolerance. 

3. What changes in my business might affect my coverage needs? 
Discuss any business changes such as expansion, new locations, or changes in your supply chain that could increase your exposure to risks. Your broker can help you adapt your policy to these changes. 

4. Are there new coverage options or enhancements available? 
Insurance policies evolve to address new risks, such as cyber threats or supply chain disruptions. Ask about any new coverage options that might be beneficial to your business or any enhancements to existing policies that could offer broader protection.

5. How can we improve our risk management strategies? Risk management plays a key role in minimizing the need for Business Interruption claims. Ask your broker for advice on strategies to reduce the likelihood of disruptions, such as implementing disaster recovery plans or ensuring your business continuity strategy is up to date. 

Conclusion 

 

Having the right business interruption insurance can save you from unexpected challenges that can come in the way and protect your business. By working closely with a trusted insurance broker, you can ensure your coverage is tailored to meet your needs and adapt as your business evolves. Akan Insurance Brokers helps you with customized business insurance solutions that protect your income, assets, and financial stability during unforeseen events. Let us help you navigate the complexities of Business Interruption insurance and ensure that your business remains resilient, no matter what challenges arise. Reach out to us today for expert advice and coverage tailored to your needs. 

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