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Insurance Terms Defined – Business Interruption

Business loss prevention

Like all industries, insurance has its own language and uses all kinds of terms and jargon that may not be common knowledge.

For this reason, we have available on our site a glossary of insurance terms as well as a collection of blog posts that go a little more in-depth into some of the more common or confusing terms you might come across in business, home and auto insurance.

In this post we’re going to cover a term that is very common in business insurance and that has recently been getting some press with COVID-19 – Business Interruption.

{Stay tuned for an upcoming post where we touch on some of what’s been going on with business interruption and the pandemic}.

Business interruption refers to insurance coverage against business expenses and loss of income resulting from fire or other insured peril. The crucial part to this definition is the “resulting from x peril.” This reference is the key to understanding the scope of your coverage.

While generally speaking this usually refers to a business (or supplier) sustaining physical damage, as with all insurance coverage, no two plans are the same. For this reason, it is extremely important that you have a firm grasp on the specifics surrounding interruption coverage for your enterprise and what the policy language means.

You might have a named perils policy (coverage ONLY applies to specific perils named, such as fire), or a comprehensive policy (coverage against any peril unless specifically excluded).

You can expect to come across three types of business interruption coverage…

~ A gross earnings coverage, which offers compensation to the business until the damage is mitigated.

~ A profits form coverage which offers compensation until the business goes back to its normal level (as it was before the interruption was triggered).

~ An extra expense coverage whereby the business can still operate despite the interruption.

Please see the Insurance Bureau of Canada’s website for more details on business interruption – click here and here.

For some tips on preventing business interruption, check out our post.

Have some other insurance jargon on your radar that you’d like clarified? Check out our blog posts defining common terms and peruse our full glossary of insurance terms here.

Click here to get in touch with us for a business insurance quote or give us a call at 1-855-237-2905

We have provided the definitions in this blog post for general information purposes only. They are not meant to be complete descriptions to cover any and all terms, conditions and exclusions that are found in different insurance policies. If there is any inconsistency between this information and the definitions in your policy, it is your policy that governs. Contact your insurance broker if you have any questions or need any clarification about your particular policy and the definitions therein.

Image source: interphasesolution | FreeDigitalPhotos.net

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