In a previous blog, we discussed how insured property values may need to be increased because of a number of inflationary factors affecting restoration costs. These continue to include high construction costs (material, labour, etc.) and increased demand for these services.

Another issue arising that’s just as critical for business owners is the business interruption coverage timeline following a loss: The global supply chain and its continued challenges to keep up with increased consumer demand.

In the case of a loss, weeks turn into months, and months turn into years, causing your business interruption policy’s indemnity period to be put to the test.

Well, how long does BI Coverage last?

Business interruption claims stop when the earliest of one of the following happens:

» The property is repaired (in the case of Gross Earnings coverage) or the profit levels are back to normal (in the case of Profits coverage);

» The indemnity period is over (typically 12 months); or

» The coverage limit is reached

Whichever comes first – the insurance claim will end.

Certainly, the first outcome is most ideal. We want to help our insureds avoid situations where the claim is over because either time ran out on the indemnity period or the coverage limit was not adequate.

The standard indemnity period for business interruption losses are 12 months.

In this uncertain climate of supply chain and labour shortages, businesses should review their business interruption coverage and consider extending that period in cases where it may be a more difficult to get back up and running (i.e. supply chain challenges and labour shortages).

Indemnity periods can often be extended to 18 or 24 months, but keep in mind that you’ll also want to increase your limit to account for the longer claim time.

What’s the next step? Talk to your insurance broker about your indemnity periods and what makes sense for your business’s unique situation.

Not currently insured with Staebler? Reach out to our Commercial Solutions team to get a quote, discuss your coverage options, and be sure that your business is properly insured.