Business interruption insurance

Venue owners: Are you covered against wildfire smoke?

Experiencing the effects of unhealthy air quality this past summer—due to intensity of Canadian wildfire smoke—became a common occurrence. Does your business host outdoor events that are affected by the smoke? If so, you may wonder if event cancellation coverage can protect your business from the financial consequences of having to cancel your events.

Whether wildfire smoke is a covered cause of cancellation is a question that must be answered by reviewing the purchased or prospective policy. The pollution exclusion, if present in the policy, may be broad enough to include smoke from a wildfire. For questions about event cancellation coverage and how you can add or update your insurance policy, give our office a call—we want to assist you.

What is business interruption insurance? Business interruption insurance is a coverage typically found in part in the property (fire) policy, which provides a business with insurance coverage for physical damage to their physical property (such as the building or contents). A business interruption policy assists businesses in recuperating from lost income and paying for ongoing expenses following a covered incident, like a wildfire. The coverage is to protect businesses from financial losses resulting from disruptions to their business operations.

When does business interruption insurance apply? Typically, business interruption coverage is triggered when a business is affected by covered perils (e.g., fire, wind, vandalism, or explosion), and declares the business temporarily inoperable. For example, if an outdoor venue space is damaged by wildfire smoke, which forces the venue to close for a one-week period, the business interruption insurance policy would cover the outdoor venue’s lost revenues for that week, as well as rent, utilities, payroll costs, and other operational expenses. An outdoor venue business may incur expenses related to responding to the wildfire including costs to relocate the venue or costs to clean, repair, or replace inventory affected by the fire. These relocation and restoration expenses could be covered by business interruption insurance policies.

It is crucial for business owners in the event industry to prioritize the protection of their businesses, employees, and themselves by ensuring they have the coverage in place that will safeguard against potential damage resulting from smoke, ensuring the continuity of business operations and the ability to provide exceptional experiences for their attendees.

For questions about business interruption coverage and how you can add or update this valuable insurance policy to best protect your business, call us—we want to assist you.