How business interruption insurance can help your business after an unexpected disaster

4 minute read  

If your business ever runs into the unexpected, like storm damage, a sudden power outage, or even a fire, it’s important to be ready. Be sure to have a clear, simple plan for what to do right after a disaster strikes, and make sure to consider business interruption insurance. This type of coverage may be able help with financial losses in the event there’s damages caused by natural disasters or other types of emergencies.

What are some of the disasters businesses should prepare for?

Disasters that negatively impact your business can seemingly come from out of nowhere. It’s important to know what these disasters are and how they may affect you and your business.

Tornadoes and hurricanes

In Canada, business properties can sometimes experience some unexpected weather changes. Tornadoes and hurricanes can periodically pop-up, especially in the summer months. Tornadoes can often strike quickly, causing direct damage to structures and interrupting supply chains, which may lead to  business closures or property damage. Hurricanes can also bring a cascade of challenges like flooding which can cause infrastructural damage. Both also have the ability to cause power outages which can further interrupt business operations.

Floods

Floods can be an issue in many parts of Canada, especially in areas with heavy rainfall or frequent snowmelt. These disasters can disrupt businesses in many ways. They can cause direct damage to buildings and equipment and potentially block access to business locations, making it difficult for both customers and supplies to get through. This disruption can lead to delays in operations and services, impacting both revenue and customer relationships. Plus, the recovery from a flood may involve a significant cleanup effort, which can be both time-consuming and resource-intensive, further delaying a return to normal business activities.

Wildfires

Wildfires, particularly in British Columbia and Alberta, can present a serious challenge for Canadian businesses. Directly, they can damage buildings and assets, leading to costly repairs or replacements. Operationally, wildfires can force evacuations and road closures, disrupting your employees’ ability to work and possibly hindering supply chains. In addition, poor air quality can put both employees and customers’ health at risk.

Cyberattacks

Cyberattacks can be a major concern for businesses, impacting companies of all sizes through different means, such as data breaches, ransomware, and phishing. Incidents like these can bring operations to a standstill, especially if critical systems are compromised or taken offline. For instance, a ransomware attack can lock out access to essential data, causing significant downtime. Recovering from attacks can often involve complex and time-consuming efforts to secure and restore systems. Beyond operational disruptions, cyberattacks can potentially erode customer trust, especially if sensitive information is leaked.

Vandalism and theft

Vandalism and theft can deeply disrupt a business, leading to more than just the immediate costs of repairs or replacements. Vandalism may not only cause physical damage but can also interrupt daily operations, especially if crucial equipment is affected. Theft can also directly impact your business, as the loss of valuable merchandise or equipment can affect your day-to-day operations.

Property fires

Fires can lead to extensive downtime as companies grapple with the aftermath. The need for repairs, cleanup, and the restoration of essential infrastructure can translate into prolonged operational interruptions. Fires can impact a business’ reputation, erode customer trust, and result in financial setbacks.

Utility outages and infrastructure failures

Business operations can be severely disrupted by power outages or water supply interruptions. These may lead to immediate setbacks, hindering productivity and causing delays in your business’ processes. Power outages can result in the loss of crucial data and network downtime, while water supply disruptions can disrupt manufacturing processes and essential facilities.

How can business interruption insurance help after a disaster?

Business interruption insurance can be an important part of your overall business insurance policy when preparing for events that may affect your operations. Always make sure to review your coverage with an insurance specialist so you know the exact events your policy may cover.

Lost business income

The primary benefit of business interruption insurance is its ability to help cover the income your business would have earned during a period of forced closure due to a covered event. It’s important to speak with your insurance specialist to see how this amount is calculated.

Operating expenses

Even if your business is temporarily non-operational, certain expenses can continue to accrue. Business interruption insurance can help cover these ongoing expenses, such as rent, utilities, and loan payments, helping ensure that your financial obligations are met during any downtime.

Employee wages

One of the biggest concerns during a shutdown is the ability to retain and pay employees. Business interruption insurance can help cover payroll, allowing you to keep your staff employed and ready to resume work when your business reopens.

Taxes

Business interruption insurance can help ensure that your business continues to pay taxes, potentially avoiding penalties and interest.

Relocation costs

If a disaster makes your primary business location unusable and you need to relocate to continue operations, business interruption insurance may cover the costs associated with moving to and operating from a temporary location.

Training costs

In some cases, after a major disruption, new equipment or software may be required to resume operations. Business interruption insurance may cover the costs of training employees to use these new tools efficiently.

Extra expenses

Business interruption insurance can sometimes cover extra expenses that are above and beyond normal operating costs but are necessary to keep the business running after a covered loss. This can include the cost of hiring temporary help, leasing equipment, or other necessary expedited services.

Ensure you’re protected

Sudden disasters can throw your small business off balance or temporarily force you to close. Events like tornadoes or vandalism may cause expensive interruptions and really harm your business. That’s why it’s important to consider business interruption insurance, which may be able to help if you’re temporarily forced to close your doors.

TruShield Insurance is here to support your business’ growth and success. We offer a range of risk management solutions designed to protect your bottom line and help your business flourish. 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.