Business Interruption Calculator
Evaluate your insurance gross profit, detect underinsurance and simulate your losses in case of a claim. Free tool by Assur360.
Start SimulationInsurance Gross Profit Calculator
Calculate your insurance gross profit (subtractive method) to determine the amount to insure for business interruption.
Results
Underinsurance Detector — Coinsurance Rule
Check if your business interruption coverage meets the coinsurance clause of your policy. Underinsurance can drastically reduce your indemnity in case of a claim.
Your Coverage Analysis
Claim Simulation
In case of a claim, you would absorb this penalty out of pocket. An Assur360 partner broker can review your policy for free.
Recommended Indemnity Period
Determine the adequate coverage duration based on your business sector, equipment complexity and client type.
Recommended Indemnity Period
Complete Loss Simulation
Simulate the financial impact of a loss on your business under different scenarios.
Loss Breakdown
Understanding the Coinsurance Rule in Business Insurance
The coinsurance rule is one of the most misunderstood concepts in business interruption insurance in Quebec. It determines whether your indemnity will be full or reduced in case of a claim.
What is Insurance Gross Profit?
Insurance gross profit (GP) does not correspond to your company's net profit. It is your revenue minus uninsured variable expenses — costs that naturally stop during a business interruption. It therefore includes your fixed costs (rent, salaries, insurance, depreciation) and your net profit. This is the amount your insurer uses to calculate your business interruption coverage.
How Does the Coinsurance Rule Work?
Your business interruption policy contains a coinsurance clause, typically set at 80%. This means you must insure at least 80% of your projected gross profit over the indemnity period. If your insured amount is below this threshold, the insurer applies a proportional penalty on every claim — even for small losses.
The Coinsurance Rule Formula
Required Amount = Projected GP × coinsurance rate × (indemnity period / 12)
Indemnity = Loss × (Insured Amount / Required Amount)
If the insured amount is equal to or greater than the required amount, the indemnity covers 100% of the loss.
Concrete Example: The Impact of Underinsurance
Consider a manufacturing SME in Laval with a projected gross profit of $1,100,000. With 80% coinsurance and a 12-month period, the required amount is $880,000. If the company is only insured for $600,000, it is underinsured. For a $300,000 claim, the insurer will apply the coinsurance rule: the indemnity will be reduced to $204,545, leaving $95,455 for the company to absorb.
The Indemnity Period: An Often Underestimated Factor
The indemnity period must cover not only the physical reconstruction of your premises and equipment replacement, but also the time needed to regain your clientele and normal operating pace. For a restaurant, allow 12 to 18 months. For a manufacturer with specialized imported equipment, 24 to 36 months may be necessary.
Increased Cost of Working (ICOW)
Increased Cost of Working (ICOW) represent exceptional expenses incurred to maintain or restart your operations: temporary premises rental, subcontracting, overtime, express material shipping. These costs are covered in addition to the gross profit loss, provided they are reasonably incurred to reduce the overall loss.
5 Common Mistakes in Business Interruption Insurance
Insurance GP includes all your fixed costs — it is typically 40 to 70% of your revenue.
If your revenue increases without adjusting your coverage, you automatically fall into underinsurance.
Reconstruction always takes longer than expected. Add the time to return to normal clientele.
The penalty applies to EVERY claim, even a small $50,000 loss.
Without precise documentation, the claim settlement will be lengthy and potentially unfavorable.
Most At-Risk Sectors in Quebec
Certain industries are particularly vulnerable to prolonged business interruption. Restaurants and hotels in Montreal, Quebec City and Gatineau depend on commercial equipment with 3 to 6 month delivery times. Manufacturers in Drummondville, Sherbrooke and Trois-Rivières often use machine tools imported from Europe or Asia. Healthcare clinics in Laval, Longueuil and Lévis must maintain their clientele during reconstruction. Construction companies in Saguenay, Saint-Jean-sur-Richelieu and Rimouski are vulnerable to heavy equipment breakdown.
Frequently Asked Questions About Business Interruption
What is Business Interruption (BI) Insurance?
Business Interruption (BI) insurance covers the loss of income a business suffers when a covered peril (fire, water damage, etc.) forces operations to stop or slow down. It reimburses lost gross profit and extra expenses incurred to resume operations.
How Do I Calculate My Insurance Gross Profit?
Subtract all uninsured variable expenses from your annual revenue: merchandise purchases, variable commissions, outbound shipping, variable bank fees and supplies. The result is your insurance gross profit. Use our calculator above for a precise calculation tailored to your situation.
What is the Coinsurance (Proportional) Rule in Insurance?
The coinsurance rule penalizes policyholders whose insured amount is less than the required coinsurance percentage. If you are underinsured, the indemnity will be reduced proportionally to the ratio between the insured amount and the required amount, even for a small claim.
What Indemnity Period Should I Choose for My Business?
The indemnity period must cover reconstruction time, equipment replacement AND return to normal operations. For retail, 12 to 18 months is usually sufficient. For a manufacturer with specialized equipment, plan for 24 to 36 months. Use our recommended period calculator.
What are ICOW (Increased Cost of Working)?
ICOW (Increased Cost of Working) are exceptional expenses incurred to maintain your operations after a loss: temporary premises, subcontracting, overtime, express shipping. They are covered in addition to the gross profit loss if reasonably incurred to reduce the total loss.
How Much Does Business Interruption Insurance Cost in Quebec?
The cost varies depending on your sector, revenue, insured amount and claims history. On average, a Quebec SME pays between 0.5% and 2% of the insured amount per year. An Assur360 partner broker can compare offers from multiple insurers to find the best coverage-to-price ratio.
Is Business Interruption Automatically Covered in My Commercial Policy?
No. Business interruption insurance is a separate endorsement that must be specifically added to your commercial insurance policy. Without this endorsement, only property damage is covered. About 40% of Quebec SMEs have no business interruption coverage.
What Should I Do If I Am Underinsured?
Contact your broker immediately to adjust your insured amount. The additional premium cost is usually minimal compared to the potential penalty in case of a claim. Use our underinsurance detector above to assess your situation, then request a free review of your policy.
Are Cyberattacks Covered by Business Interruption Insurance?
Most traditional business interruption policies exclude cyberattacks. A dedicated cyber insurance policy with a business interruption component is needed to cover losses related to ransomware, data breaches or IT system failures. Ask your broker about combined coverage.
Why Use an Assur360 Partner Broker for My Business Insurance?
An Assur360 partner broker works for you, not the insurer. They compare offers from multiple companies, negotiate terms and ensure your business interruption coverage is adequate. Their expertise can prevent costly mistakes like underinsurance or an insufficient indemnity period.
Get a Personalized Analysis from an Assur360 Partner Broker
Our partner property and casualty insurance brokers analyze your current coverage for free and propose solutions tailored to your business.
The estimates provided by this tool are for informational purposes only and do not constitute an insurance quote, professional opinion or formal advice. For a personalized assessment of your needs, contact an Assur360 partner broker.