When it comes to business insurance, seasonal businesses often have different coverage needs than businesses that operate year-round. Seasonal businesses may only need coverage during operating periods, or higher levels of provision during peak months.

For example, a beachside ice cream shop may only need small business insurance during the summer months, before it closes for the season. Likewise, a snow removal business may only need insurance during the coldest, snowiest months of winter.

While seasonal business insurance has some benefits, continuous coverage is almost always the best solution for all businesses, including seasonal businesses.

For some businesses, seasonal business insurance makes sense. It means you don’t have to pay for insurance during the months when your business isn’t operating or isn’t making as much money.

One thing to consider with seasonal business insurance, however, is that starting and stopping your policy will create gaps in your coverage, leaving your business open to risks. In addition, you could pay higher rates for insurance when you buy a new policy for the next term.

In fact, it can be more expensive to buy seasonal insurance than it is to get a year-round commercial insurance policy. In terms of cost efficiency, continuous business insurance is often the best option.

Seasonal business insurance provides cover for businesses that are only open during certain months or that make most of their profits at certain times of the year. Here are some scenarios that are covered by a seasonal business insurance policy.

If your business will only be open during certain months, you can arrange a seasonal insurance policy to protect you against a slow season, as long as the losses are due to events beyond your control.

For example, imagine you own a tax agency, and a fire destroys your office as you prepare for the busy tax season ahead. The fire limits your ability to help customers, which causes you to lose money during the most profitable time of your year. In this type of event, a business interruption insurance policy would be beneficial.

For the price of your term insurance premium, you are buying the assurance that you will have sufficient income to keep your business running, and that your employees are paid no matter what external events slow you down.

Summer camps, fireworks stands, holiday gift shops, lots of Christmas trees, and landscaping companies are among the many types of businesses that often operate only a few weeks or months of the year. In this case, a seasonal business insurance policy could be worth it.

If you own a purely seasonal business, you can buy a seasonal insurance policy that provides cover only for the period you will be operating. This allows you to pay for what you need and secure a policy that accounts for the unique risks that seasonal businesses face.

Many small business owners who rely on seasonal events to generate income offer special promotions to attract customers during that season (or usually during a slow season). If you choose to offer a promotion, you can purchase an insurance policy that covers the offer, potentially preventing you from losing a lot of money.

Most commercial insurance companies do not allow customers to pause their policies and resume them at another time in the future. If you no longer need coverage, the only option is to cancel your policy and buy a new one when you want coverage again.

However, canceling a business insurance policy is not recommended, and can actually hurt your business in a number of ways. When you cancel an insurance policy, it creates a gap in your coverage, which can be a red flag for insurance companies.

When you end up buying another policy, you can expect to pay more for your coverage than you did in the past. Also, you probably won’t get a full refund if you cancel your policy before it expires.

For these reasons, we strongly recommend that you take out cover throughout the year, as it will be more cost effective in the long run.

Before you insure your seasonal business, it is important to consider your needs, and weigh the pros and cons of a seasonal insurance policy versus a year-round insurance policy.

For some seasonal businesses, a short term business insurance policy may be sufficient.

For example, if you have just launched a business as a mountain tour guide, you may choose to purchase one-day insurance policies for the tours you have planned. Or, if your side hobby is wedding photography, a one-day insurance policy could offer enough protection for a few jobs each year.

Year-round coverage is almost always a better option for seasonal businesses.

Choosing an ongoing business insurance policy is usually less expensive on a monthly basis in the long run. And because there are no gaps in your coverage, your business is always protected from third party claims. Nor will it jeopardize your ability to keep business licenses that require insurance.

Year-round business insurance could also be a better (and cheaper) option if your seasonal business is looking to expand. So, if your beachside ice cream shop is getting ready to open another location in the next town over, you might want to consider a year-long policy.

You should also take out ongoing insurance if you are storing business property during the short term. If you get seasonal business insurance for the peak season and cancel it a few months later, your business property is no longer protected against potential risks, such as weather damage or theft.

For further savings, you can look into a business owner’s policy (BOP), which is a bundled policy that includes general liability insurance and commercial property insurance. The average BOP premium cost is $57 per month or about $684 per year.