Business Interruption Insurance

Business interruption insurance provides a source of income in the event that a peril suspends your operations causing disruption, reduction or a complete elimination of regular income. This includes coverage for additional expenses incurred to expedite the loss process for your return to normal business. Business interruption insurance is important to be aware of as it is not automatically part of a standard general liability insurance policy. Business interruption insurance is an add-on coverage that can be endorsed to the property portion of your insurance policy.

What does Business Interruption Insurance cover?

When your business is forced to close due to a loss by a covered peril, business interruption can assist in covering your ongoing operating expenses, including:

Revenue
Mortgage, lease and rent payments
Taxes
Loan Payments
Employee Payroll
Relocation Expenses
Extra Expense
Temporary Repairs

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Who Needs Business Interruption Insurance?

Business Interruption Insurance is recommended for all types of businesses. Whether your company is big or small, every business has ongoing expenses that need to be covered if business is disrupted. The following industries can be significantly impacted by interruptions in business making business interruption coverage critical:

Manufacturers
Wholesale Distributors
Warehousing
Retail
Restaurants
Hospitality
Building owners

What Is the Coverage Period?

The coverage period, also known as indemnity period, is the time period covered by your insurance policy for loss of business. Most standard insurance policies include a 12-month indemnity period, but longer periods of coverage can be offered such as 24, 36 or 48 months.

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How to Choose the Right Type of Business Interruption Insurance?

There are various types of Business Interruption Coverage available to consider:

Gross Earnings Coverage

Provides coverage until your insured property is replaced or repaired even if you haven’t regained your previous earning level.

Profits Form

Provides coverage until your business returns to its normal, pre-interruption level of profits, up to your policy limit and coverage period.

Extra Expense

Designed for businesses that are able to continue running while recovering from damage, it covers extra expenses like re-locating to another building temporarily, short-term repairs, additional advertising or outsourcing work.

Rental Income Coverage

Designed to provide lost rental income that is generated on the insured premises. Coverage is provided until the repair or replacement is complete, up to your policy limit and coverage period.

Actual Loss Sustained

Provides coverage for loss of gross profits and extra expenses including rental value, up to your policy limit and coverage period and is considered to be the broadest scope of business interruption coverage.

FAQ

What Are the Types of Business Interruption Coverage that Are Available?

There are two basic forms of business interruption indemnities or coverages that are available:

Extended (or profits): continues to pay until your business resumes its normal level of production, pre-interruption level of earnings, subject to the maximum period of indemnity listed in your policy.
Limited (or earnings): pays only until the damage is repaired or the property is replaced. As soon as your business is operational again, the policy stops paying even if you haven’t regained your previous level of earnings.

What Is the Process to Obtain Business Interruption Insurance?

To get started with obtaining Business Interruption Insurance, companies need to provide a business interruption worksheet which is instrumental for identifying appropriate coverage.

This worksheet typically includes:

Revenue

the value of all goods produced and/or sold and all services rendered during the fiscal period from the operation of the business including amounts earned from investments (e.g. interest and dividends)
Net Income

the amount by with revenue exceeds expenses in a given period of time
Insured Standing Charges
- All fixed expenses (e.g. building insurance, property taxes, depreciation & interest
- Expenses that do not vary with production/sales such as:
  - Salaries of key management/employees
  - Business and Realty Taxes
  - Rent (fixed portion)
  - Depreciation
  - Advertising and Promotion
  - Office and Administration
  - Among others

Note: Insured Standing Charges do not include:

Depreciation of Stock
Bad Debts
Sales Commissions

FCA Insurance has a wide array of insurance markets that we work closely with to tailor the right insurance coverage for your business operations.

Does Business Interruption Insurance Cover Pandemics?

Business Interruption insurance does not cover a pandemic as this type of coverage is triggered when there is an occurrence of a physical loss or damage. Most business interruption policies contain a pandemic and virus exclusion.

This exclusion has been a hot topic of discussion and has been challenged legally since the COVID-19 pandemic began. While there have been a few exceptions, COVID-19 has not been classified as a physical loss. Businesses with business interruption coverage that sustained losses during the pandemic cannot expect recoup their rent or lost revenue.

Why Choose FCA Insurance?

Ease of Doing Business

We set the industry standard for turnaround time for both new and existing clients, you can expect excellence.

Trusted by Insurance Markets

Outstanding relationships with all of the most reputable insurance markets in the industry, giving you the power of choice.

Insurance is What We Do

Our industry-leading team boasts eighty dedicated and licensed professionals ensuring a smooth and efficient experience.

Testimonials

Laura does the work to get us the best prices with the best coverage. She also keeps us abreast of the new types of insurance that a business such as ours might need. Her yearly renewal visit is comprehensive to say the least, but when she leaves, we all understand the exact nature of each and every policy our business has.

Carol

FCA covers us for all our business requirements, from equipment to liability, property, builds and everything in-between. Errol Williams is so patient and helpful; I am always confident that we are getting the best possible coverage at a competitive rate. Always the best service!

Lisa

Jamie and his team have been great to deal with, providing transparent advice and excellent service!

Cam

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