Insurance FAQ: Business

Business insurance comes in various forms to protect different aspects of your operation. The most common types include:

• General Liability Insurance – Protects against third-party claims for bodily injury or property damage
• Professional Liability Insurance – Also known as Errors and Omissions insurance, protects against claims of negligence or inadequate work
• Commercial Property Insurance – Covers your business property and equipment
• Business Interruption Insurance – Compensates for lost income during closures
• Cyber Liability Insurance – Protects against data breaches
• Commercial Auto Insurance – Covers vehicles used for business purposes

The cost of business insurance in Canada varies widely depending on factors such as your industry, business size, location, coverage limits, claims history, and specific risks.

The best way to determine your specific costs is to consult with an insurance broker who can provide customized quotes based on your business needs.

Some forms of business insurance are legally required in Canada, while others are optional but highly recommended:

• Commercial Auto Insurance is required for any vehicles used for business purposes.
• Professional Liability Insurance may be mandatory for certain regulated professions.

While General Liability Insurance isn’t legally required for most businesses, it may be contractually required by clients, landlords, or lenders. Even when not mandatory, appropriate business insurance is considered essential protection against potentially devastating financial losses.

Commercial General Liability (CGL) insurance typically covers:

• Third-party bodily injury (customer slips and falls at your premises)
• Third-party property damage (you accidentally damage a client’s property)

CGL policies usually exclude professional errors, employee injuries, damage to your own property, vehicle accidents, and intentional acts. Coverage limits can be customized based on your business needs and risk exposure.

Commonly known as D&O insurance, is designed to safeguard individuals against personal financial losses in the event of a lawsuit arising from their role as directors or officers of a commercial company and individuals serving on boards of public or non-profit organizations. This type of insurance can also cover the legal expenses and other associated costs incurred by the organization due to such legal actions

Several factors influence your business insurance premiums:

• Industry and business classification (higher-risk industries pay more)
• Annual revenue and business size
• Number of employees
• Years in business
• Claims history
• Coverage limits and deductibles
• Business location
• Building age and construction (for property insurance)
• Safety measures and risk management practices
• Specialized equipment or operations

Working with your broker to implement risk management strategies and choosing appropriate deductibles can help manage premium costs while maintaining adequate protection.

Yes, most home-based businesses need dedicated business insurance. Standard homeowners or renters insurance typically provides very limited coverage for business equipment (if any at all) and no liability protection for business activities.

Depending on your business, you may need:

• Home-based business endorsement on your personal property policy
• Professional liability insurance
• Product liability insurance
• Commercial auto insurance for business-related driving

Even if you rarely have clients at your home, you could face liability claims related to your products or services, making appropriate business insurance essential protection.

A Business Package Policy is a comprehensive insurance package designed specifically for small to medium-sized businesses. It combines several essential coverages into one convenient, often cost-effective bundle.

Typically, a BOP includes:

• General liability insurance (third-party injuries and property damage)
• Commercial property insurance (your building, equipment, and inventory)
• Business interruption insurance (lost income during temporary closures)

Many insurers allow you to customize your BOP with additional coverages like professional liability, cyber liability, or employment practices liability insurance. BOPs generally offer premium savings compared to purchasing each coverage separately.

Provides financial protection to businesses when they are forced to suspend operations temporarily due to a covered loss.

Ex) Your restaurant has a fire in the kitchen, rendering your building inoperable (IE: no revenue coming in) until the necessary steps are taken to re-open. From the date of the loss to when you re-open and resume operations, your Business Interruption coverage would come into play (pending a full review of your policy wordings and the claim situation itself).

Cyber liability insurance protects businesses from the financial consequences of cyber attacks and data breaches. It typically covers:

• Data breach notification costs
• Credit monitoring services for affected individuals
• Legal expenses from customer lawsuits
• Regulatory fines and penalties
• Crisis management and public relations
• Cyber extortion payments
• Data recovery costs
• Business interruption losses

Any business that collects customer data, accepts online payments, has a website, uses cloud services, or maintains electronic records should consider cyber liability insurance.