Business Interruption & COVID-19

What is business interruption coverage?

Business Interruption coverage is typically an add-on to an existing business insurance policy. In the event of loss or damage to a business or damage to a neighbouring property requiring the business to shut down, business interruption insurance covers continuing expenses or replaces lost profits.

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

Business Interruption policies require proof that the insured premises sustained physical damage from an insured peril that was covered under their business insurance policy. Once that damage is established, the business interruption coverage is triggered for loss of business income. A business that is interrupted due to the pandemic may not have sustained any physical damage.

How does business interruption insurance work?

There are three types of Business Interruption 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.

Am I covered by my business interruption insurance for COVID-19?

A business that is interrupted due to closure due to the pandemic may not have sustained any physical damage. Without physical damage to the insured premises the BI coverage is not triggered.

Should I be making a business interruption insurance claim given that I had to close down operations due to COVID-19?

All businesses are encouraged to talk to their insurance representative if they are unsure whether the business interruption coverage was triggered.