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Coronavirus: Can business insurance help?

Some types of business insurance may be able to help with coronavirus-related claims

We’ll continue updating this page with resources and information as new details emerge on how Canadian leaders and businesses are responding to COVID-19.

Small businesses are being hit hard by the coronavirus (COVID-19) pandemic as customers stay at home, staff get sick and the government forces closures. Unfortunately, even the most robust business insurance policies aren’t offering much help.

If business has dropped due to COVID-19

Many businesses have already seen a huge drop in customers due to social-distancing guidelines, restrictions on travel and several other sweeping containment efforts. Unfortunately, if your business is open but customers aren’t coming, it’s unlikely insurance will be able to help.

However, there are other ways you can seek financial help. These include grants and other non-repayable funding, business loans and even wage subsidies for businesses that keep paying staff.

Canada Emergency Wage Subsidy (for small & large businesses, nonprofits & charities)

Until June, 2021, eligible businesses as well as nonprofits and charities can apply to receive a wage subsidy for specific 4-week “claim periods.” The number of employees businesses have is irrelevant — this subsidy is to help both large and small businesses. Funding does not automatically renew. Business owners must reapply for each claim period after the period is over.

The Prime Minister also encourages subsidized businesses to use funds to hire back employees that have been laid off due to the pandemic.

For claim periods 1-4 (March-June, 2020)

Employees of subsidized businesses can expect to have 75% of their incomes covered up to a maximum of $58,700 (up to $847/week). Business revenues must have decreased by at least 30% as a result of coronavirus. Business owners can use sales figures from January and February (2020) to demonstrate their losses. Additionally, they only need to show a 15% drop in revenue during March, given that most businesses didn’t feel the effects of COVID-19 until half-way through the month.

For claim periods 5 and onwards (July, 2020 – present)

For claim periods 5 and onwards (July, 2020 – present), employees of subsidized businesses can expect to receive a base rate percentage that varies depending on how much revenues have dropped. If your business has lost more than 50% of revenues, an additional top-up rate will also apply. The maximum rate a business can receive as of claim periods 8-10 (October–December, 2020) is 65%. Check the Government of Canada website to get the latest information for the current claim period.

Canada Emergency Rent Subsidy

The Canada Emergency Rent Subsidy program provides rent subsidies of up to $75,000 per business location and up to $300,000 per business group (including any affiliate entities). Eligible businesses include for-profits, non-profits and charities. There is no minimum revenue drop required to qualify.

The actual amount businesses will receive is a base rate percentage that will vary depending on how much revenues have dropped. Businesses located in areas affected by public health restrictions may also qualify for an additional 25% through the Lockdown Support program. You can apply through your CRA My Business Account or through the Government’s “Represent a Client” service. Visit the Government of Canada website for more details.

Note: In October, 2020, the Canada Emergency Rent Subsidy (CERS) was introduced to replace the Canada Emergency Commercial Rent Assistance (CECRA) program. New applications for CECRA stopped being accepted as of September 30, 2020.

Canada Business Emergency Account

The federal government is guaranteeing up to $55 billion in interest-free loans to eligible small businesses (this includes sole business owners and operators, contractor-reliant business, farms and family-owned businesses that pay employees in the form of dividends). This will help such companies cover costs in the coming months as the economic impact of COVID-19 continues to unfold. Lines of credit up to $60,000 will be available with a 0% interest rate to businesses that spent between $20,000 and $1,500,000 total on payroll in 2019.

Once approved, businesses should be able to receive funds within a few days. If your loan is repaid by the end of 2022, then 33% of it will be forgiven (up to $22,000). Applications are now available through your financial institution.

Businesses that already applied for CEBA funding under the previous lending limit of $40,000 can apply for a $20,000 expansion. Business owners have until March 31, 2021 to apply regardless of whether they’re first-time applicants or simply applying for an expansion.

Innovation Assistance Program (IAP)

In April 2020, the government introduced the Innovation Assistance Program (IAP) to support innovative small- and medium-sized businesses with high potential. If you received this support between April 1 and June 23, 2020, you may be eligible to receive extended IAP funding that was made available in November, 2020. However, you can’t get IAP support at the same time as the CA Emergency Wage Subsidy or BCAP financing. Former IAP recipients will be contacted with more information.

Government Work-Sharing Program

The government offers income support to prevent layoffs when a business’s normal level of activity is reduced because of circumstances beyond the employer’s control. To be eligible, employers and employees must sign and submit a work-sharing agreement together.

Loans from the BDC and EDC

In light of COVID-19, the government has devoted billions of dollars in extra funding to organizations like the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to provide additional loans to businesses that need support. Additionally, the Domestic Stability Buffer has been lowered so that banks can legally make somewhat riskier lending decisions to allow more businesses to qualify for financing.

Financial relief from banks

Financial officials from the Canadian government have been in direct contact with representatives from some of the nation’s biggest banks (BMO, CIBC, National Bank of Canada, RBC, Scotiabank and TD) and have been assured that these banks will be flexible with making arrangements to help individuals affected by coronavirus. Requests will reportedly be evaluated on a case-by-case basis.

Innovation Canada database of business funding opportunities

Innovation Canada has a website has a large database of programs and services (including grants, subsidies, loans, tax credits and other sources of funding) that are available to businesses from private and public sources. Use the search tool to find opportunities that could suit your business.

What support is available to those who have lost their jobs?

If you have to close due to government guidelines

Many provincial governments have announced all non-essential services must close, including restaurants and theatres. It was a huge blow to thousands of business owners and, sadly, it’s unlikely insurance will be much help.

Most business insurance policies do not include coverage for infectious diseases or government-mandated shutdowns. Check your policy to see if it excludes “quarantinable diseases” or “biosecurity emergencies” – categories that coronavirus (COVID-19) falls into. However, if you purchased specialized business interruption coverage or supply chain disruption coverage, you may be covered in the event of a pandemic.

Since most business insurance policies are specially designed with your business needs in mind, you should contact your insurer to see what you may be covered for under your policy.

What if your staff get sick?

If your business isn’t too badly impacted by COVID-19 restrictions, you may have a fighting chance of making it through the next few months. But if your staff get sick , it could majorly impact your ability to continue operating normally – or operating at all.

In some cases, workers’ compensation may be able to help. The government has also waived the one-week wait time for people in quarantine to receive Employment Insurance (EI), so employees can access that as soon as you’re off work. You also no longer have to submit a doctors note as part of your application.

Will cyber insurance help?

Cyber insurance has never been more important for businesses, as employees working from home can easily weaken online security.

Thankfully, many cyber insurance policies include coverage for security breaches that happen while employees are working remotely. Of course, you’ll have to meet the requirements laid out in your policy, but your business should still be covered in the event of a breach.

If you don’t have cyber insurance yet, you may still be able to get it. Insurance companies can even help you strengthen your defences, so your business is less vulnerable to attacks.

What about trade credit insurance?

Trade credit insurance is another type of coverage that may pay out in relation to the coronavirus. If a key client can’t pay their outstanding debt, which may very well happen in these increasingly uncertain times, trade credit insurance will likely cover some of their unpaid bill. Check with your insurer to see what coverage is included in your policy.

If you don’t have trade credit insurance, policies are still available. However, it’s possible pricing will reflect the turbulent times and may be unaffordable at this point.

Keep up-to-date on all things related to COVID-19

How can the POST Promise program help my business re-open after the lockdown?

On June 9, 2020, Prime Minister Justin Trudeau announced the POST Promise program to help businesses and customers stay safe during the initial phases of reopening. The program consists of a declaration that participating businesses will commit to implementing and practicing 5 key steps to keep workplaces safe:

  1. Maintain physical distancing. The distance should be at least 2 metres or around 6.5 feet.
  2. Stay home if unwell. Encourage employees to monitor their health.
  3. Practice respiratory etiquette. Cough or sneeze into your arm and wear a face mask where social distancing is impossible.
  4. Clean and disinfect regularly.
  5. Wash and sanitize hands. Hands should be washed for at least 20 seconds.

The program is voluntary. Businesses that choose to commit can display the POST Promise logo to show customers that best practices are being followed to keep everyone safe.

The program is NOT a certification or official seal of approval from any regulatory body – it’s merely meant to provide a signal by which businesses and customers can comfortably interact. Visit postpromise.com to learn more.

Looking for more ways to save some cash?

Are you worried about your finances during this time? Spending time on a little admin can save you from spending more cash than you need to.

Here are some guides on how to save money on your daily expenses during the COVID-19 outbreak. From small steps you can take to save money to special programs – it all adds up in the end!

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