This week, TraveLaw Online’s Doug Crozier and Tim Law of Heifetz, Crozier, Law respond to a question from an agent who didn’t have business interruption insurance and is wondering if they should get it for the ‘next time.’
Q: Knowing what I now know about the impact of COVID-19, I wished I’d gotten Business Interruption insurance. Should I get it now, for the “next time?”
A: That’ll be a commercial call for you to make, perhaps with some input from your professional advisors.
Business Interruption (“BI”) coverage is designed to cover a loss of income triggered by a disaster, by putting the business into the same position (subject to policy limits and terms) as it would have been in the absence of the disaster. It can be secured:
i) EITHER on a named-perils basis (where one of the identified types of disasters must occur in order to trigger coverage) OR an all-risks basis (which is self-explanatory); and also
ii) EITHER for a time period (again, subject to policy terms) that ends when your business re-opens, OR that ends when it has reached pre-disruption volumes.
Obviously, in each case, the former is less expensive than the latter. Your COVID-era experience will help you to decide which of those options works best for you. So, will your professional advisors.
When getting quotes, be sure to ask specifically for numbers that will apply to you if you decide to buy. Don’t rely on statements as to past (i.e. pre-COVID) premium rates, for they are bound to rise in response to the claims that are being made on existing BI policies, since mid-March of this year.
A large number of Insurers will also be trying to recoup legal fees incurred in responding to a current Class Action that alleges an improper refusal to respond to COVID-related claims on existing BI policies.
If you have a question, you can contact Crozier or Law at firstname.lastname@example.org or connect with Bob Mowat at Canadian Travel Press/Baxter Media at email@example.com.
Heifetz, Crozier, Law is a Toronto law firm that has for years represented all aspects of the Canadian travel industry. The lawyers at HCL also maintain a non-travel practice, covering litigation, real estate, Wills, corporate/commercial matters, etc. To contact HCL, e-mail firstname.lastname@example.org.