What Insurance Do I Need For My Small Business?

What types of insurance does a small business need in Canada?

You know you need Business Insurance as a Small Business owner in Canada, but you're not sure which coverages you exactly need. That's okay! The fact that you already know you need insurance and that it is necessary to have peace of mind is a great first step. All of the different coverages, acronyms and other insurance terms may seem confusing; we're here to demystify Business Insurance. There's a couple coverages common to Small Business Insurance that you will likely need; in this blog, we'll break down how each Business Insurance coverage can help protect you without the confusing insurance jargon!

Commercial General Liability

Regardless of what your business is or what your business does, every small business is at risk for liability claims. Commercial General Liability coverage protects against two common types of liability claim: bodily injury and property damage. Bodily injury to a third party – e.g. one of your customers or clients falling and breaking a wrist on your property - is a common liability claim against small business owners.

You may not even be responsible for their own injury on your property but they can still file a liability lawsuit against you, and any such resulting suit could find you financially responsible for costs associated with their pain and suffering, medical bills, lost wages and legal fees.

“Property” can either refer to a building you own, or the “stuff” you keep in a rented workspace.

If you’re found legally liable for damages made to a third party’s property, you could face costly legal expenses and damage to your reputation. For example, you repair cars and while working on a customer’s vehicle, you accidentally break the axle. You may face a property damage lawsuit; however, having adequate property insurance coverage can protect you in such a case.

Business Interruption Insurance

The 2013 Alberta floods and the Fort McMurray wildfire were examples of the importance of Business Interruption coverage to Canadian businesses. It keeps your business going after a major incident and provides financial relief to help cover ongoing expenses until you’re back on your feet. Business continuity planning and a robust risk management strategy go hand-in-hand as something all business owners should consider.

Product Liability Insurance

Product Liability refers to situations where an issue arises with a – usually tangible - product and the root cause of the problem can be traced back to the business that originally sold the product. If that’s your business and you’re found responsible for an issue with one of the products you sell, you could find yourself tangled up in a nasty legal battle. Your Product Liability Insurance protects you from legal and medical costs that may arise in these instances. Examples of these types of claim stem from products that cause property damage or injure someone - such as faulty goods, people getting sick from food and drink and so on.

Professional Liability Insurance

Professional Liability is also commonly known as Errors and Omissions (E&O) Insurance, Professional Indemnity, or Medical Malpractice in the case of medical professionals. This protects business owners when a client claims they’ve suffered a financial loss due to mistake or omission in the service provided by your business. Let’s say you’re a realtor and you’ve been hired by a new client to sell them a house, quickly and sight-unseen. Unfortunately, when drawing up the specs, your assistant makes an error and incorrectly lists the square footage, getting the size wrong, which results in your client buying a property much smaller than they were anticipating. They sue you as a result. Professional Liability Insurance can cover costs associated with the lawsuit – even when it’s just a baseless allegation of wrongdoing. Businesses who need E&O provide professional services. They’re designers, consultants, financial advisors, photographers, architects and more.

Cyber Risk Coverage

Accelerated by the ongoing impact of a global pandemic, the threat of cyber attacks and breaches have gathered more traction than ever. Many small business owners don’t see themselves as a target for hackers due to their type or size of business. But the truth is that many cyber attackers are actually targeting small businesses because they aren’t as prepared or well-protected as mid or large-sized corporations. Additionally, all business have people; people are the main vulnerability of an organization when it comes to this type of breach. A common cause of cyber breaches are simply human error like an employee falling for a phishing email and sending sensitive business information to a hacker by accident. The range of industries affected by cyber crime is vast and expanding constantly. It’s not just IT companies who have cyber disasters. It’s hospitals, breweries, governments, schools - and the list goes on.

A cyber attack ruins your credibility among your clients and partners. Cyber risk coverage can help with costs associated with a data/cyber breach to your computer, network or other electronic systems, as well as, the costs associated with repairing the potentially vast damage to your reputation.

Equipment Breakdown Insurance

Whether it’s a bay of computer servers, a table saw, a gas oven or a lawn mower, if that equipment suddenly breaks down, it could mean significant downtime. Equipment Breakdown Insurance can help with repair or replacement costs when that equipment suddenly breaks down without warning due to unforeseen peril.

Commercial Property Insurance

Commercial Property Insurance helps with the repair or replacement costs of your business’ physical and tangible items - like equipment, inventory, furniture, computers and other electronics, if you suffer a loss that’s covered. Your coverage can even extend to things outside your building that pertain to your business, like other buildings, outhouses, signs, fencing, trees and shrubs.

Commercial Auto Insurance

The key differences between personal Auto Insurance policies and Commercial Auto Insurance policies may lead you vulnerable to risk as a business owner. If you use your personal car for your business on a regular basis, you should consider Commercial Auto Insurance coverage. If your business is registered in the company name, it needs Commercial Auto Insurance.

If you make deliveries, or commute between job sites, use your vehicle to transport catered goods to corporate events or you use your vehicle to transport clients to and from appointments, your personal auto insurance won’t cut it. Claims related to business activities will often be denied or rejected by your provider if you only have a personal Auto Insurance policy.

There's a good chance that your small business may not need all of these Business Insurance coverages. For example, if you don't use an automobile for your business, Commercial Auto Insurance is likely unnecessary for you to obtain. It's important to get the right coverages that your business actually needs. It is extremely crucial that you have the correct coverage available to protect you during a future claim but it is also critical that you're not overpaying for an insurance coverage you don't need either. That's why you should work with an insurance broker that understands the importance of tailored Business Insurance - like Foxquilt. Our Foxquilt team of professionals works with you every step of the way to understand your small business's needs and to provide you insurance that is built for your unique business. Get started on your quote with Foxquilt today.