Facing unforeseen business closures is devastating for any Canadian company. But with the right business interruption insurance, you’re compensated for any lost income and covered for rent, electricity, and payroll. Despite all the positives, it’s still necessary to understand precisely how much you’ll pay for the policy.
So, in the following sections, you’ll discover the average cost of business interruption insurance and the price’s influencing factors.
The Average Cost of Business Interruption Insurance
Most business interruption insurance premiums start at roughly $100 per year, but they can inflate to a few thousand dollars, depending on several factors.
Interestingly, the coverage is normally included with your commercial property insurance. However, you can choose to add the endorsement to other policies too. Either way, insurers tend to calculate the cost separately from the business insurance policy’s prominent coverage.
What Factors Affect The Cost of Business Interruption Insurance?
The main factors influencing the premium price of business interruption insurance are:
- Your industry risks — If the risk of property damage is high in your industry, it’s likely that insurers will raise their costs. For instance, if you own a pizzeria, you’ll end up paying more for business interruption insurance than an advertising agency as the risks of temporary closure are higher.
- Your commercial property value — When property damage causes your business to shut down, your business interruption insurance covers the building’s rent and your short-term relocation costs. If you operate in a high-ticket commercial building, you’ll pay higher premiums so the insurer can afford to give you enough money when you claim.
- Your revenue — Alongside paying for relocation and rent, the policy covers any income you lose due to the unforeseen closure. Therefore, if you demonstrate a high revenue, you’ll pay more for insurance to ensure you’re adequately compensated during a claim.
- Your coverage limit — If you’re looking for a larger coverage limit than the one automatically given to you via commercial property insurance, expect your premiums to increase. Like other types of business insurance, as the coverage rises, so does your cost.
How Are Business Interruption Insurance Claims Calculated?
Alongside the factors above, the way your claims are calculated often plays into the cost of your premiums. Knowing the logic behind these calculations can deepen your understanding of the coverage’s price.
Typically, the claim’s value depends on the three aspects below:
- Gross profit — When you purchase the policy, you must declare your profit. Insurers typically allow for turnover growth.
- Indemnity period — Choose a period that covers your worst-case scenario to get sufficient funding.
- Additional expenses — Temporary closures often trigger other fees like accountancy costs and rent for short-term premises. Ensure they’re covered to offset the expenses against the loss of income payout.
Get The Best Business Interruption Insurance Rates With LiabilityCover
The most accurate way to determine how much your business interruption insurance will cost is to complete our online inquiry form. Our team can then analyze your needs and connect you to a licensed, leading brokerage with the best value for money.