The threats small businesses face are always evolving. Between supply chain interruptions, labour shortages, cybersecurity risks and the advancing effects of climate change, Canadian small businesses are being forced to continually adapt to change.

Business interruption insurance can play a key role in helping small businesses stay on top of the changing risk landscape, but many small business owners can overlook this type of insurance. The are many ways this coverage can help small businesses meet some of the  challenges they currently face.

What is business interruption insurance?

Business interruption insurance is a special type of commercial insurance that can help businesses when they are forced to scale back or close down their operations due to an unexpected event. This coverage may be able to help in the event of:

  • Natural disasters such as earthquakes, floods, and damaging storms
  • Fires
  • Theft or vandalism
  • Supply chain disruptions
  • Utility outages
  • Damage to key equipment

In the event of a covered loss business interruption insurance may be able to help cover:

  • Income that the business would have earned if it had remained fully operational
  • Employee payroll and benefits while the business is closed
  • Fixed expenses such as overhead, utilities, loan payments, and taxes while the business is not earning revenue
  • Cost of moving to a new business premises if necessary
  • Equipment rental

Policies can vary, so be sure to check with your insurance specialist on the specifics of your coverage.

How can business interruption insurance help my business?

Some of the problems small businesses face may force them to scale back operations or even close temporarily. Business interruption insurance may be able to help a small business survive financially and get back on its feet if the closure is due to a covered risk.

Supply shortages

Supply shortages can affect businesses of all sizes, but small businesses can be more vulnerable because they often lack the purchasing power of larger companies.. While larger businesses may be able to continue operating under these conditions, small businesses may be forced to close until they are able to get the supplies they need.

If a supply shortage is due to a supply chain disruption, business interruption insurance may be able to help.

Extreme weather

Extreme weather, including heavy rainfall, record-setting heat, destructive storms, and wildfires. These events can damage or destroy a business’s premises and its contents, potentially forcing the business to relocate or close temporarily.

If a weather event is listed in the company’s business interruption insurance policy you could be covered.

Labour shortages

Labour shortages can really impact your business, especially when it comes to skilled labour.

Although this threat is not directly covered by business interruption insurance, this insurance can help small businesses retain their staff during a business closure by paying their wages and benefits, meaning the financial impact on your staff could be mitigated and they’d be more likely to still be available when you’re ready to reopen.

Longer recovery times

Factors such as labour shortages and supply chain disruptions can also lengthen the recovery time after a catastrophic event.

Take, for example, a restaurant that suffered a major fire, resulting in the loss of the building and all of its contents. If the restaurant owners want to rebuild on the same site, labour shortages in the construction industry or delays in getting building materials could slow the rebuilding process down. Without the right business interruption coverage, this delay could lead to an even greater financial loss.

Ensure you’re covered with business interruption insurance

If you want to protect your small business from the potential losses of an unplanned closure, Federated Insurance can help you with a business interruption insurance policy priced to fit your small business.

Discover how you can help protect your business from potentially costly closures. Get a quote today!

This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information. Terms, conditions and exclusions apply to coverage. See policy for details.