An Introduction to Extra Expense Insurance in Ontario
Operating a business in Ontario is lucrative, fun, challenging, exciting – all at the same time. Regardless of whether you run a car dealership in Windsor, a vacation rental in Barrie or a cheque cashing service in Kingston, there are similarities in the amount of work you do, the amount of time you spend doing it and the risks you take to do what you love. Another similarity that all Ontario business owners share is the necessity to plan ahead and manage those risks.
Every business owner knows the importance of having Commercial General Liability Insurance to protect themselves in case someone is injured in their place of business or because of their products or services, Commercial Property Insurance to cover the costs of repairing or rebuilding their business in the event of a disaster like fire or flood and Business Interruption Insurance to help them pay their bills while their business is closed following a disaster. But for a lot of businesses in Ontario, like those that serve clients on an ongoing basis, being closed for repairs is not an option. They need to keep running their operations or risk going permanently out of business, which is why they need extra expense insurance coverage.
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What is Extra Expense Insurance?
As the name implies, extra expense insurance provides coverage for expenses that are over and above the normal operating costs. This coverage can typically be found in a Commercial Property policy that includes Business Interruption Insurance. These are the “extra” expenses a company faces to either move to a temporary location or to continue operating at its current location while the original workplace and/or equipment is being repaired or replaced. These costs typically include:
- Moving costs for any equipment that can be easily moved
- Rent or leasing cost of a temporary workspace
- Equipment purchase or rental and installation
- Utilities
- Extra payroll expenses for overtime or temporary staff
It is important to note that these costs, again, are extra expenses on top of your existing business costs, and they have to be considered both reasonable and necessary for your business to continue operations.
Do You Need Extra Expense Insurance?
If you run any of the following types of companies extra expense insurance coverage should definitely be considered:
| Essential services | banks, doctors’ offices, hospitals, pharmacies |
| Continuous services | call centres, security services |
| Mobile businesses | technician services, construction and trades |
| Location specific businesses | Manufacturing, mining, oil & gas, agriculture, cannabis, retail etc. |
Extra expense insurance coverage is of specific benefit to businesses that can’t easily be operated from another location.
How Much Does Extra Expense Insurance Cost in Ontario?
The cost of an extra insurance coverage will depend on the location of your business, type of business, amount of coverage desired and the degree of difficulty in moving your business to a new location, among other factors.
Extra expense insurance coverage can only be purchased as part of a Commercial Property Insurance policy. Contact an ALIGNED business insurance specialist to discuss the coverages that make sense for your business.
Why Choose ALIGNED?
ALIGNED Insurance Brokerage operates two locations in Ontario and our Advocates understand the specific challenges and risks associated with running a business here. That makes us uniquely positioned to offer sound advice and the best solutions for protecting your business.
