When it comes to purchasing insurance for your business, there is no "one size fits all" solution. Every business is unique, and therefore you and your personal insurance broker will need to consider and assess the unique risks your business faces. Thankfully, there are many options and policies available, allowing you to design an insurance package that adequately addresses your specific circumstance.
Property & Liability Insurance
Generally speaking, there are two types of business insurance that all businesses need: property insurance and liability insurance.
Property insurance covers your business-owned assets from destruction or damage. This includes things such as the building and equipment. If you run a home-based business, you are still required to insure your business assets with a separate contents insurance policy, as your homeowner's policy will not cover business equipment. Contents insurance will protect your assets against things like fires, floods, and theft.
General liability insurance will protect your business from liabilities resulting from negligence causing injury to an employee or customer. Depending on your current policy, you will also be covered if someone is injured as a result of using your product or service. If you are in the business of manufacturing or assembling goods, product liability insurance is recommended. Check with your personal insurance broker or business insurance company to see if your policy includes this type of coverage.
If you are a professional, such as a lawyer, doctor, or realtor, you may wish to consider carrying a professional liability insurance policy to cover things such as malpractice. In some provinces this type of insurance is mandatory depending on your profession. If you are unsure of the requirements in your specific profession, contact your provincial professional organization or personal insurance broker.
Determining Premiums & What to Insure
In order to determine your business insurance premiums, it is necessary to make an itemized list of your assets, with dollar amounts for each, as well as how much you wish to insure each item for. In some cases, the premium for insuring a particular item may be too high to warrant insuring it in the first place. However, if the business would not be able to bare cost of replacing a particular asset, it should definitely be insured.
For businesses that have employees, workers' compensation insurance is required in Canada. For more details visit:
Another type of policy you may consider concerning employees is Key Person insurance. If your business is structured in such a way that it depends heavily on the skills or expertise of certain key people, this type of policy will protect you from losses arising from the death or long-term disability of these integral employees (until they can be replaced or return to work). Similarly, if your business is a partnership, you also have the option of purchasing Buy-Sell insurance. This will provide you with the compensation needed to buy your partner's share of the business should they be become deceased or disabled.
In some instances, your business may be forced to temporarily close down for unforeseen reasons beyond your control. If your business is particularly at risk when in comes to things like the weather or outages, you should consider business interruption insurance as a means to recover lost revenue.
Clearly, insuring your business is not as simple as insuring your car, and it will require a great deal of risk-assessment and planning with a business insurance company or personal insurance broker to find a policy or combination of policies that fit your needs. If you need coverage for your new business, or are looking to re-asses your current policy contact us
for a quote or consultation.