Written and reviewed by Hafsa Bashir, Principal Broker at HIFA
RIBO licensed · Principal broker at HIFA, working with owner-operated businesses and the families behind them across the western GTA.
Last reviewed July 2026 · 5 min read
Ask a restaurant owner how long they would be closed after a serious kitchen fire and the usual answer is a month, maybe six weeks. The real answer, once permits, insurer approvals, contractor availability and equipment lead times are counted, is commonly six to twelve months.
That gap between the assumption and the reality is what makes business interruption the coverage most likely to run out halfway through a restaurant's recovery.
Two numbers, not one
Business interruption coverage has a limit and an indemnity period. The limit is how much it will pay. The indemnity period is how long it will keep paying. A generous limit with a three-month indemnity period stops paying in month four regardless of how much of the limit is left.
What the coverage is meant to replace
Not revenue — gross profit, meaning revenue less the costs that stop when you stop trading, plus the expenses that continue whether or not you are open. Rent is the big one, and in most commercial leases it keeps running while you are closed. Salaried staff you intend to keep, loan payments, insurance and utilities continue too.
Building the timeline honestly
Walk the sequence: fire, adjuster attends and scopes the loss, agreement on scope, municipal permits, contractor engaged and scheduled, the work itself, equipment ordered — commercial kitchen lead times have been long and unpredictable — installation, inspection, health approvals. Then reopening to a customer base that has spent months eating elsewhere.
That last point is worth insuring for as well. Extended business interruption continues to respond after you reopen while trade builds back, and for a restaurant that is rarely instant.
The leasehold improvements problem sits alongside it
The other number that is usually wrong is the value of your tenant improvements. You paid for the build-out; the landlord's policy does not cover it; and the figure on your policy is often the one set the year you opened. Construction costs have moved considerably since. Insuring the build-out at its original cost is underinsurance on the day the policy is issued.
What to ask at your next renewal
Three questions. What is my indemnity period? What replacement cost is my leasehold improvement limit based on, and from what year? Does my policy respond to damage originating in a neighbouring unit, and does it respond if the building is closed but my own unit is undamaged?
Illustrative and general. Policy wordings differ — confirm the position on your own policy with a licensed broker.
Coverage availability, eligibility, limits and pricing vary by insurer and individual circumstances. Information on this website is general and is not a substitute for reviewing policy wording or speaking with a licensed insurance broker. Nothing on this site binds coverage or constitutes an offer of insurance.