Business Insurance In Canada

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Business Insurance In Canada

Written by Caitlin Wood

Updated June 21, 2021

Business Insurance In Canada

Categories

Business Insurance

Business insurance is a type of policy that provides coverage to business owners in the event of loss from unexpected events, such as property damage, theft, or on-site injuries. Without a business insurance policy in place, your business could suffer enormous financial loss that can force you to shut your doors forever. 

No matter how big or small your business is or how long you’ve been in operation, having a business insurance policy in place is critical. 

Types Of Business Insurance

Every business is different, which is why it’s important to have your insurance policy customized according to your exact needs. Luckily, there are several types of business insurance available to help ensure that you get the coverage needed to best suit your business. 

Commercial Property Insurance

If you have a physical property, then a commercial property insurance policy is needed. This type of policy will provide coverage for the actual structure of the building, as well as items within the buildings, such as equipment and inventory. Your policy will cover you for unforeseen events like fire, theft, vandalism, or flood. 

If you operate your business from home, you will still need a commercial property insurance policy, as your home insurance policy will not provide coverage for your business. 

General Liability Insurance

This type of insurance will cover you against any potential litigation against you in the event that someone is hurt while on site, whether a staff member or customer. It will also provide coverage for any damage done to your storefront or warehouse. Any legal costs associated with lawsuits against you will be covered with this type of insurance policy.

Professional Liability/Errors And Omissions Insurance

Any consequences that arise from your services or advice will be covered with a professional liability or errors and omissions insurance policy. For instance, if you are a lawyer that has given poor advice to a client that results in major financial loss or even incarceration, any damages resulting from a lawsuit against you would be covered with this type of policy.

Commercial Auto Insurance

If your business depends on a vehicle to some degree, then you’ll need a commercial auto insurance policy. This type of coverage will protect you against damage or theft of your car, as well as any liability on your part in the event that you damage another person’s car with your vehicle. 

Cybersecurity Liability Insurance

Most likely, some part of your business operates online. That means that some of your business information — as well as that of your customers — is on the world wide web and vulnerable to hacking. Unfortunately, “cyberattacks” are on the rise, and they’re affecting businesses both large and small. 

With cybersecurity insurance in place, you’ll be covered in a variety of ways. For example, it may cover the cost of credit monitoring, legal fees, and even ransom money when valuable data is held hostage. 

Directors And Officers Liability Insurance

It’s possible that not only are your business assets at risk, but so are your personal assets. In a directors and officers liability claim, your personal assets may be vulnerable if you are the person in charge of your business. 

Many people can choose to sue you, including employees, customers, vendors, and even government officials. But with a directors and officers liability insurance policy in place, you’ll be covered against these exorbitant fees. 

Crime Insurance

This type of insurance protects your business from a staff member who steals from you, slanders your company, misrepresents your company, or may be a security risk. 

Key Person Insurance

Every business has a person or persons who play a key role in the health of a business. If that person passes away or becomes incapable of continuing in their role, this could put the health of the business in jeopardy. A key person insurance policy will provide coverage for any losses that stem from an interruption of business operations as a result of the loss of a key player. 

Business Interruption Insurance

This form of insurance will replace a portion of income in the event of a loss in revenue if business operations are interrupted. While you work to get your business back up and running again, a business interruption insurance policy will fill in the financial gaps. 

Best Insurance Providers In Canada

Types of Business Insurance Available
AllstateCommercial General Liability Insurance
Commercial Property Insurance
Professional Liability Insurance
Cyber risk & data breach
Co-operatorsBuildings, contents and stock
Equipment Breakdown
Protecting your revenue
Insurance for co-operatives
Insurance for non-profits
Liability
Crime Coverage
Rainproofing checklist
Farm insurance
AvivaProperty and liability
Commercial auto
Contract and Commercial
RBCBusiness Overhead Expense
Key Person
Buy Sell
IntactMobile property
Commercial general liability
Commercial vehicles
Surety bonds
Errors and omissions
Commercial property
Commercial general liability
Commercial vehicles
Privacy breach

Factors That Affect The Cost Of Your Business Insurance

How much does a business insurance policy cost? The answer to that question will depend on a number of factors, including the following:

Coverage Amount

The more coverage you think you will need, the higher your premiums will likely be. So, a $10 million policy will likely cost more than a $5 million plan. 

Size Of Your Company

Generally speaking, a bigger business usually means there’s more at risk. This applies to the actual physical size of your business headquarters where you operate, as well as the number and value of all your business assets. The more you have, the more expensive it will be to insure it all. 

Revenue 

The more revenue your company generates, the higher the cost of business insurance. 

Number Of Employees 

You will be exposed to more liability with a larger team of employees. There’s an inherent risk that comes with having people on staff and on site, and with greater risk comes a more expensive insurance policy.

Location 

Insurance policies vary in cost based solely on location. This is applicable not just to business insurance, but also to other types of insurance, including car insurance and home insurance. 

Business Industry 

Certain industries come with more risk than others. For instance, a construction company has a higher risk of experiencing injuries among employees compared to a retail clothing store. As such, business insurance policies will vary in cost depending on the industry.

Deductibles

When you file a claim, you’ll first need to pay a deductible before your policy kicks in. You can choose the deductible amount to pay. Generally speaking, a higher deductible means lower regular premium payments. 

Claims History 

A history of claims might mean you’re more of a risk to your insurer, which could translate into higher insurance costs to have a policy in place. 

Business Insurance FAQs

How much does business insurance cost?

As mentioned above, there are several factors that affect the amount you will inevitably pay for your business insurance policy. That said, a small business owner can expect to pay anywhere from $500 to $5,000 every year in premiums. 

Can business insurance be written off as an expense? 

Yes, you can deduct your business insurance premiums incurred on things like the building and equipment that you use for your business operations. 

Is business insurance mandatory to run a business?

Small business insurance isn’t mandatory to run your company in Canada. But it can prove to be invaluable in the event that you find yourself stuck with a hefty bill to cover the cost associated with any losses related to your business. Further, your lender may require that you have a business insurance policy in place when applying for some type of business loan.  In addition, certain types of businesses may require insurance if there are staff members employed. For instance, construction businesses require WSIB insurance coverage for their employees. 

Final Thoughts

If you run a business or are just starting to get one up and running, you’ll want to have a business insurance policy to accompany it. There is so much at stake with a business, and considering how hard you have worked to run your company, you don’t want anything to happen that can throw a wrench in it. A business insurance policy can protect your business from any unforeseen issues that may come your way. 

Caitlin is one of Canada's leading personal finance writers. She is a graduate of Dawson College and Concordia University. She has been part of the Loans Canada team for over eight years. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security.

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