📉 Business Interruption Insurance: Profits vs. Gross Earnings 📈 🇨🇦
When a fire, flood, or other covered event forces your business to halt operations, Business Interruption Insurance can mean the difference between recovery and closure. One detail that’s often overlooked is whether your policy is based on Profits or Gross Earnings. Here’s what you need to know 👇
💰 Profits Coverage
- Reimburses the net profit your business would have earned if the loss had not occurred.
- Best suited for businesses with healthy profit margins where net income is a key driver.
- Focuses on protecting the bottom line.
🏗️ Gross Earnings Coverage
- Covers lost gross earnings (sales revenue minus variable costs such as materials and supplies) until operations are restored.
- Often broader, as it accounts for ongoing expenses like rent, utilities, and payroll that must be paid even when income stops.
- Protects your ability to keep the business running during downtime.
⚖️ Which Is Right for You?
- Profits coverage may be sufficient for established businesses with steady margins.
- Gross earnings coverage is often preferred by manufacturers, contractors, or businesses with high fixed costs that can’t easily be paused.
✅ Takeaway
Both options can safeguard your business, but the right choice depends on your cost structure, risk tolerance, and long-term strategy. A conversation with an experienced broker can help ensure your coverage aligns with your recovery needs.
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