Does My Business Need Strike Coverage?
SmartFinancial Offers Unbiased, Fact-based Information. Our fact-checked articles are intended to educate insurance shoppers so they can make the right buying decisions. Learn More
Strike insurance — a specialized form of business interruption insurance — offers a financial safety net for businesses by covering operational costs during a shutdown due to labor disputes. Learn about the cost of coverage as well as how to get the protection your business needs.
What Is Strike Insurance?
Strike insurance is a type of coverage usually included in a business interruption insurance policy that provides financial assistance should a business temporarily closed due to their workforce going on strike. This coverage can extend some much-needed financial relief while you undergo negotiations with your striking workforce.
While this may seem like an unnecessary form of coverage, consider that 23 major strikes occurred in 2022, idling 120,600 workers. The majority of these workers were in the service industry so if you operate a restaurant, you may be statistically more at risk of facing a worker strike.
On top of this, we also have the Writers Guild of America strike which began in May 2023 and has seen 11,500 writers halt work on TV series and movie productions. The following month, the Screen Actors Guild and American Federation of Television and Radio Artists (SAG-AFTRA) joined strike alongside the Writers Guild of America.
How Does Labor Strike Insurance Work?
If your small business faces a temporary shutdown due to an employee strike, maintaining financial stability can be challenging due to decreased or halted revenue. Should the closure qualify for coverage, business interruption insurance can assist by covering ongoing operational costs, including rent, loans, taxes and even the costs of relocating.
How much of your income is covered is determined by the coverage duration and your operational costs like payroll, rent, loan payments and working capital. Your coverage will typically begin after a 24 to 72-hour waiting period deductible.
Now, commercial insurance policies can be written as open peril policies or named peril policies. Open meaning all perils are covered unless the peril is specifically excluded. On the other hand, named peril means only listed perils on the policy will be covered.
What Does Strike Insurance Cover?
During your business's temporary shutdown, strike insurance provides coverage for a range of operational expenses, such as:
- Forgone income
- Monthly overheads like lease, rent or mortgage payments
- Employee wages
- Outstanding loan installments
- Advertising and promotional expenses
- Costs associated with temporary relocation
- Expenses for staff training on new equipment or systems
- Utility bills
What Isn’t Covered?
Strike insurance coverage is not a catchall and your policy will likely carry exclusions. Generally, a strike insurance policy won’t cover damages if your employees vandalize or steal from your store, nor will it pay to replace the lost inventory. In addition, you may not be covered for an employee strike if your workers were illegally hired or paid under the table.
How Much Does Strike Insurance Cost?
The cost of business interruption insurance, which may include labor strike insurance coverage, varies based on factors like operating costs, industry and coverage limits. On average, you can expect to pay $500 to $1,500 per year.
Key variables affecting the price include the scope of coverage needed, industry risks and location. Higher revenue businesses and those in riskier industries will generally pay more.
Do Employees Lose Insurance if They’re on Strike?
Striking employees may find themselves able to maintain health insurance coverage through the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA is a federal law guaranteeing temporary healthcare for workers after they've left their jobs for up to 18 months.
Effective July 1, 2023, California's Assembly Bill 2530 allows striking employees to acquire health insurance through Covered California, covering premiums for workers who earn just above the Medicaid eligibility level. This new law was passed in response to union/employer disputes where health insurance for striking workers was at risk.
However, alternative coverage may cost more than the employee's regular employer-sponsored plan. According to the Kaiser Family Foundation, about 159 million Americans rely on employer-sponsored health insurance, with employers typically covering the majority of the costs. The average employer and worker contributions for health insurance are 83% and 17% for single coverage and 73% and 27% for family coverage, respectively.
How Do I Get Strike Insurance for My Business?
When searching for employee strike insurance for a new business or established business, it's advisable to gather quotes from at least three to five different providers. These companies will ask for various details about your enterprise, like your operating expenses, the field you're in and your earnings. However, sharing this data with each provider can become time-consuming.
Luckily, platforms like SmartFinancial can simplify this task for you. Complete a single questionnaire about your insurance needs and budget and you can find a tailored commercial insurance plan in a matter of minutes. To get your complimentary insurance quote, just input your zip code below.