When operating a small business, you’ll often feel that there are more things to do in a day than you have time for. From driving sales and bookkeeping to motivating your employees, you might find yourself so busy that getting small business insurance gets lost in the shuffle. While it can be difficult to find time to consider the different insurance options out there for your small business, insurance is one of the most vital parts of running your business, that should not be neglected or ignored.
Business insurance is important for managing business risk. No one can predict the future, so while shopping for business insurance, if you find yourself asking “Do I need this one or not?”, it’s always better to be safe than sorry.
Let’s take a look at why you need small business insurance in the first place and the type of insurance available to small businesses in Canada.
What is Business Insurance?
Insurance for your small business will help protect your financial assets, as well as intellectual and physical property, from losses. This includes lawsuits, theft, property damage, vandalism, employee injuries and illnesses, and property damage. There is a wide variety of small business insurance coverage available in Canada, so let’s start by evaluation the standard ones.
Why Do I Need Small Business Insurance?
To put it simply, if you don’t have insurance, you put yourself, your employees, and your assets, as a risk.
For example, could your business still operate if something happens to one of the partners? What if there is a natural disaster that destroys your business? Would you have enough capital on hand to deal with such emergencies? These are all scary thoughts, but there is always a chance of it happening to your business. Don’t worry, there are a wide variety of business insurance coverage packages that provide tailored protection to address your businesses’ specific needs.
When you’re shopping around for small business coverage, think about what sort of protection your business actually needs. These can include Your industry, business property & equipment, intellectual property, and employees and customers.
Types of Insurance for Canadian Small Business Owners
Since insurance varies greatly, it’s best to ask an insurance broker for advice. They are more familiar with specific types of businesses and can provide you useful information. Here are the different types of insurance that may apply to your business:
Insurance for business owners and/or business partners
- Life insurance – This insurance covers and protects your family just in case something happens to you
- Partnership insurance – If your partner dies (in whatever circumstance) this insurance will allow you to purchase your partner’s share and continue operating your business
- Disability Insurance – If you are unable to work due to illness or injury, this insurance will provide you with income for some time
- Key employee insurance – If you rely on certain employees with excellent skills to run your business, you can protect yourself against losing those key employees
Insurance for business property
- Property insurance – It will cover your business property or building in case of natural disasters or any other type of damage or destruction.
- Assets insurance – This covers assets that you store at your business or warehouse. If you are leasing a spot for your business, the chances are that the property manager already has property insurance, but you still need to get assets insurance to protect your contents.
- Auto insurance – You need to insure any type of vehicle that you use for your business. If you use your own vehicles for business purposes, be sure to let your insurance company know
- General Liability insurance – It protects you and your business against two things: employee/client injury on your premises and property damage
- Product liability insurance – If your business sells products and they turn out to be defective or cause harm to your customers (either bodily injury, illness, or property damage), this insurance protects you from any legal and medical costs that may arise
- Professional liability insurance – If your business provides professional or creative services, like web design or financial advice, this insurance protects you from being sure by a client for error or omission in the service provided by you
- Cyber liability insurance – Hackers are everywhere in the digital world, and the majority of them are targeting small business because they may not be as prepared as larger organizations to deal with cyber-threats. This insurance protects you against a lawsuit from a security breach that might compromise your personal or business information.
Mistakes to avoid when purchasing business insurance
Small business owners tend to make the mistake of under or over insuring their business. Besides that, they make other mistakes that result in them overpaying for their insurance. In order to avoid these mistakes, don’t settle for purchasing all of your insurance through one provider (unless there is a discount or something). Shop around and see if there’s anything better out there.
Secondly, don’t just accept the first policy from your broker. Sure, your broker might have your business’s best interest in mind, but keep in mind that they receive a commission off of policies they sell. And once you have to renew, the chances are that your rates will also increase. So speak to your broker and negotiate a lower rate. If you can’t get a hold of them during the renewal time, don’t just accept the higher rate. Instead, shop around more!
How much does small business insurance cost?
It’s actually a lot more affordable than you think.
It also depends heavily on what type of small business you operate. For example, if your business has delivery vehicles, you need to get an auto insurance. Let’s take a look at some other real-life examples:
Example 1 – A small sunhat store located in a busy street would need a combination of liability and property insurance for about $1,200/year. If they needed additional employees or insurance for that, that might be another added grand on top.
Example 2 – A big internet service provider company that owns vehicles and other assets and has several locations and lots of employees might pay more than $5 million/ year for insurance.
There are several Canadian insurance companies out there: Trust Shield Insurance provides you with a quote based on your business operation, and Aviva Insurance works closely with you and your broker to make sure you’re properly insured now and in the future. You can also learn more about your small business insurance options through the Insurance Bureau of Canada.
The hunt for small business insurance is a nerve-racking process, but it will give you peace of mind in the long run. That is, having the right business insurance is vital to the survival of your business. Don’t forget to discuss your business insurance options with a broker or an insurance representative to find the right plan for your business. You know what they say, “Better safe than sorry!”
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