Do you want to run a successful business in Canada? You should know what small business insurance is and how it works to help select the right policy for you.
Insurance can protect you against many things in your business. Don't let a lack of understanding keep you from learning about it to cover your company.
Small business insurance is a type of insurance that protects your small company. It can help when an employee becomes sick or has an injury on the job.
The coverage may also protect your business against property damage, theft, and lawsuits. Knowing how small business insurance works is essential for all small business owners.
You'll be able to obtain the right type of insurance for your needs. Then, you can ensure you have the coverage necessary to run your business successfully.
Read on to learn about insurance for small businesses.
Small business insurance is for any small business owner. It doesn't matter if you have employees or not because the coverage will protect you and your company.
Even if you work online and don't have customers visiting you, you never know when you'll need insurance. After the amount of time you've spent setting up your business, creating a website, designing your logo, gaining your clientele through advertising, it's easy to forget that insurance is a critical component in small business as well. Someone may sue you tomorrow, and you'd need to pay for all of your costs if you don't have coverage.
If you do have employees or if your customers visit your business in person, insurance is even more vital. You don't want anyone to experience an injury when at your business, and a good policy will help if that happens.
For-profit and non-profit businesses can both benefit from insurance. It's important to understand what insurance covers to help your business.
What Does Small Business Insurance Cover?
When looking at small business insurance, you may wonder how it will help. Different policies may have unique features, but you can still learn what to look for in a good insurance policy.
Like other types of insurance, some small business insurance policies will cover more than others. But good policies should cover some basic things.
That way, you won't have to worry about losing your business because of a lawsuit or some other problem. You will be able to keep everything running as you resolve the situation.
Consider the following types of coverage you may receive when you purchase insurance.
Commercial General Liability Insurance (CGL)
Commercial general liability insurance (CGL) is an essential type of coverage. CGL offers protection when someone claims your advertising is false.
It's also useful when an employee or customer slips and falls in your office or store. Brick-and-mortar businesses should select a policy with CGL coverage.
However, online businesses may also benefit from it. Otherwise, you'd need to be extra careful when promoting your business to make sure your advertising is clear and accurate.
Professional Liability Insurance
Also known as errors and omissions, professional liability insurance is another vital type of coverage. This insurance is best for business owners that provide consultations or another service.
You may have people claim that your advice didn't help them or that you didn't complete a service. Having professional liability insurance can protect you against such claims.
Consultants, lawyers, accountants, and similar professionals should obtain this type of protection. Even if you do your job well, you may accidentally leave something out, so you need to cover yourself and your business.
Product Liability Insurance
If your business involves selling a physical product, you may want to obtain product liability insurance. This is particularly important if your product may cause property damage or bodily harm.
Someone may sue you if they become hurt because your product malfunctions. Without this protection, you may be liable for more of the cost of damages.
However, when you have this coverage, the insurance company may help cover the cost. Then, you won't have to have as much money to pay to help your customer.
Commercial Property Insurance
Commercial property insurance is another type of coverage you should consider. It can protect any of your business's assets if something happens to your property.
You can use this coverage to safeguard point of sale (POS) systems, inventory, and office furniture. The insurance kicks in after theft, vandalism, or a natural disaster.
Whether you work from home or another location, property insurance is vital for any business. However, if you run your business from home, you may need separate home and commercial property insurance.
Cyber Liability Insurance
The rise of the internet has made cyber attacks more common. If you want to protect your business from hackers, you should purchase cyber liability insurance.
This type of coverage helps if there's a data breach that exposes important data. It can be vital for eCommerce businesses and online service providers.
Cyber liability insurance can protect you from legal and civil damages, crisis management expenses, and business interruption. Even if your business isn't totally online, you may want to have this coverage for peace of mind.
Directors and Officers Insurance
Directors and officers insurance is a type of liability insurance that can protect you and other owners. It will specifically protect your personal belongings if someone sues you for your work in your business.
This applies if an employee, customer, or someone else sues you. Having this insurance can be particularly useful if you're a sole proprietor and don't have other types of insurance.
It's also useful for any other owners, directors, or officers. That way, you can all protect yourselves against potential lawsuits.
Types of Small Business Insurance
Knowing what small business insurance covers is nice, but it can help to know the two main types of coverage. That way, you can select a policy that will provide the protection you and your business need.
Whether you're a hairdresser, a consultant, or sell a product, you may benefit from different types of small business insurance. Consider the differences between the types of small business insurance. Then, you can choose a company that suits your needs.
General Liability
A general liability insurance policy will provide CGL coverage. This coverage can protect your business when there's a problem with your business operations, completed operations, products, and premises.
If any of those things damage someone's property or hurts them, you will need this insurance. An example would be if an employee slips at work and needs medical care for a broken bone.
You may also need general liability insurance if a product makes a customer sick or damages their property. General liability insurance should be broad, which can help protect you against various issues.
Professional Liability
Professional liability insurance is important for service providers because it protects them from lawsuits. If your work causes a loss to your client, they may sue you for damages.
You may also want this insurance in case you don't meet a client's expectations. Whether you miss a deadline or forget a vital detail, professional liability insurance can cover you.
Even if you do everything you can to avoid errors, they can happen. The last thing you want is for a lawsuit to ruin your business, even when you missed a deadline by accident.
What Is Not Covered by Small Business Insurance?
Unfortunately, small business insurance doesn't cover everything. Before you choose a small business insurance policy, you may want to find insurance that will cover more things.
You'll need homeowners' insurance or renters' insurance to cover your personal assets and other items. That way, you can run your business from home without taking on excess risks.
You and Your Employees
Another thing that small business insurance doesn't cover is you and your employees. Yes, it can protect you if an employee sues you for an injury.
However, you may need workers' compensation insurance to protect your employees. Directors and Officers' insurance can protect you and any other owners that work in your business.
Intentional Criminal Acts
Small business insurance is great for protection due to accidents. However, it won't cover you if you or someone in your company commits a crime.
You should make sure to hire people you trust who won't do anything to sabotage your business. Then, you can avoid this issue.
Cost Guarantees and Estimates
If you provide a cost guarantee or estimate for a job, insurance won't protect you if something goes wrong. To help mitigate issues, you may want to have people sign a contract when you give them a quote.
Then, you'll have some sort of coverage if you charge a different final amount or have another issue. You may also choose not to offer guarantees to avoid problems that may result.
Contractual Liability
Speaking of contracts, small business insurance may not cover you when you have a contract. You and your client will need to abide by the document.
If you break your contract, small business insurance won't cover you in the event of a lawsuit. Before you send a contract to someone, make sure you can fulfill all of the duties in the contract.
What to Look for in a Company that Offers Small Business Insurance
First, you need to select an insurance company that offers the type of coverage you need. Review the types of small business insurance and the types of coverage options.
Then, you can compare a few companies to select one that meets your needs. Consider a few other factors that may help you select the right policy.
Legal Requirements
Canada doesn't require business owners to have insurance. However, you may need certain coverage based on your industry or the province or territory where your business is.
Be sure to look at local and industry requirements to ensure you have the coverage your business needs. Then, you can operate without worrying about having to shut down.
Deductibles
A cheap small business insurance policy may seem appealing, but it might have a high deductible. You can't always predict how much you will use your insurance.
However, you'll have to do some math to figure out if you may want a higher deductible or a lower one. Then, you can better plan for your expenses.
Insurance Provider Reputation
Another thing to look for in a small business insurance company is its reputation. Consider how long the company has been in business and if it has good reviews.
You can look online for reviews and compare them to those of other companies. While you may have a different experience, reviews can give you a good idea of how the service will be.
Typical Costs of Small Business Insurance
As you set your business budget, you should consider how much small business insurance usually costs. The exact price can vary from company to company, and the amount of coverage may also affect the price.
You may be able to find a policy for around $40 per month. If you need more coverage, expect to pay anywhere from $100 to $200 per month.
Before you ignore insurance due to the cost, consider the savings if something happens. You may be able to pay less than if you had to pay out-of-pocket for a lawsuit.
How to Save Money on Small Business Insurance
The easiest way to save money on small business insurance is to only obtain the coverage you absolutely need. If you don't sell a service, you probably don't need professional liability insurance, for example.
You may also be able to save money on small business insurance if you shop around. Ask for quotes from a few different companies to see what's out there.
Then, compare your options and see how much coverage you'll receive for a certain price. You can choose the lowest price to keep from spending too much.
The Takeaway
Canadian law may not require small business insurance, but it can be very useful. Be sure to consider what it does and doesn't cover as well as the types of insurance.
That way, you can select a plan that suits your needs and budget. Soon enough, you'll be able to run your business and not worry about any small thing going wrong.
Insurdinary has recently partnered with APOLLO Insurance to bring you the most comprehensive and customizable rates on the market. A licensed APOLLO agent is waiting for to answer all of your questions about Small Business Insurance. Connect with a pro today.
