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COVID-19: Business Interruption Insurance in Times of Pandemic

This is an unprecedented and uncertain time for businesses and not-for-profit organizations in Canada.

Over the past week, organizations in every sector have been severely impacted by the initial effects of the COVID-19 interruptions and shut downs. They’re facing facility closures, contracts on hold, having to layoff employees – all while ensuring the health and safety of their staff and families. And we can only imagine how difficult the situation might become over the coming weeks as the disruptions continue and potentially intensify.

As clients turn to us in times of crisis, it pains us to have to explain that business interruption insurance does not respond to pandemic situations. While business interruption insurance would normally provide coverage for loss of revenues and for employee’s salaries, widespread loss scenarios such as war and pandemics are unfortunately not covered.

Business interruption insurance is intended to cover direct physical losses such as a fire, flood or earthquake damage. The current insurance model also relies on risk being shared across geographies. The national and global scale of pandemic-related losses would be simply unsustainable. The insurance industry, and coverage for organizations, would collapse.

We obviously wish we had better news to share.

As the federal and provincial governments roll out increasing support measures for Canadian businesses and their employees, we will continue to monitor what resources are available to our clients.  

We are extremely proud to be part of a resilient and creative business community in Canada. It’s inspiring to see organizations already repurposing and adapting in order to play a larger role in the fight against this virus.

The repercussions of this pandemic are likely to last months, perhaps years, and will test the resolve of many. We remain committed to providing thorough and timely responses throughout this crisis. And we will do all we can to support our clients, be it flexible payment options, exploring ways to reduce the cost of insurance, or providing guidance during this difficult time.

Please reach out to us if you have any questions. It will be a pleasure to discuss how we can help you move forward. We’re all in this together.