Why Your Small Business Needs Insurance
Does your small business have enough insurance to protect it financially from a lawsuit, sudden closure, or fire?
Did you know? Many small business owners in Canada don’t have enough commercial insurance coverage – or don’t have any – leaving them open to financial losses that could close their doors permanently.
Why Your Small Business Needs Insurance
Not having insurance or enough insurance is a risky decision for your small business because you would have to pay all expenses, like rent or repairs, related to a sudden closure of your business.
Business insurance is a financial safety net should your business be forced to close due to fire, severe weather, or vandalism, among other covered events in your insurance policy.
Could you afford to pay the medical and legal costs should a customer get injured at your business and sues you?
The risks of not having business insurance
- Having to pay all expenses, such as rent and repairs, on your own
- Being refused a bank loan because banks can require businesses to have some type of insurance coverage if they’re taking out a loan
- Having to pay medical bills or legal fees should someone get hurt at your business
- Paying the cost of repairs out of pocket if your property is vandalized
What is business liability insurance?
Business liability insurance protects a business from financial losses that could result from accidents, errors, or negligence. It financially protects your business in the event of a lawsuit.
It usually covers bodily injury and property damage involving a third party -- customer, supplier, or member of the public. If your business is sued, liability insurance can help cover the costs of your legal defense and any settlements.
What liability insurance coverages does my small business need?
Commercial general liability (CGL) insurance
Without commercial general liability insurance, you will pay costs related to third-party (customer/supplier/member of the public) injuries or damage to their property out of your own pocket.
If you were sued, commercial general liability insurance would cover the legal costs to defend the claim against your small in court, as well as costs to cover damages to compensate third parties whether you win or lose your case.
What kind of risks does CGL insurance cover?
- Injury to a third party who is not your employee
- Damage to someone’s property
- Damage to rented property
- Medical bills if someone is injured
- Legal costs and settlement costs of liability lawsuits filed against you
- Liability lawsuits related to slander and libel
Professional liability insurance
Professional liability insurance helps protect your business from claims of negligence when performing your duties. It’s also called errors and omissions insurance.
In the case of a negligence claim, for example, a store owner with E & O insurance would have the policy pay for some or all of the claim costs.
Cyber liability insurance
You keep sensitive financial information and data belonging to your clients and to your business. What if your system is hacked by cyberthieves? Cyber liability insurance will help protect your firm financially should there be a cyber-attack and help pay for the costs of restoring your system.
Depending on the size of the data breach and the information that was taken, the customers who are affected can hold you liable and sue you for damages.
Other essential types of insurance for small businesses
Commercial property insurance
Commercial property insurance provides financial support to replace or cover repairs to your business if it is damaged by a flood, fire, or severe weather. It also covers vandalism and theft.
Commercial property insurance also covers the firm’s contents such as computers, furniture, tools, equipment, and inventory. Commercial property coverage also extends to protect others’ property that is under your care.
Business interruption insurance
This type of insurance supports you when your business operate due to a covered loss.
There are a number of losses that can force your firm to shut down. Some examples are:
- Damage to your equipment from fire or vandalism
- A major reduction in revenue due to a client/supplier facing losses of their own
- A disruption in your supply chain
Business interruption insurance can help with these expenses:
- Payroll
- Rent
- Utilities
- Property taxes
- Alarm monitoring
- Relocation of your business
Equipment and tools insurance
It replaces, or repairs damaged, stolen, or lost equipment and tools, accessories, or other property that you use for your business.
Anything valued at less than $1,500 is considered a tool and anything above that limit is considered equipment.
It can also be called equipment floater insurance.
Commercial auto insurance
Note that if you are using your car for your small business, it won’t be covered by your personal car insurance policy. You will need commercial coverage as part of your insurance package.
What’s preventing small businesses from getting commercial insurance?
Studies consistently show that the cost of a business insurance premium is an issue for many small business owners.
Let Western Financial Group help you with business insurance
A Western Financial Group business insurance broker will get you commercial coverage that uniquely protects your small business at the right value for you.
Western is a trusted, national insurance brokerage that has partnered with Canada’s top insurance companies to provide commercial insurance. We work with our insurance partners to find the best coverage for your needs.
We make the process easy by getting insurance quotes for you and giving you policy coverage options that you can choose for your business’s specific needs.
Here why you need insurance for your business
When you sign a commercial lease: A commercial lease usually has a clause requiring you as the tenant to have business insurance before you are able to finalize the agreement.
When clients/customers ask for proof of insurance: Not being able to provide proof of insurance to clients or customers who ask for it will make them question your reliability and credibility as a small business owner.
Financial protection: Business insurance protects you from lawsuits, accidents, and mishaps that could have financial consequences.
Did you know? Requests for proof of insurance can be common when signing contracts with clients or partnering with another business.
How to think about business insurance
Here’s how to plan for your business insurance needs:
- What’s your budget per month for insurance?
- What are your essential business insurance coverages?
- What kinds of insurance coverages are common in your industry?
- Shop around for comparable coverage quotes
Business insurance planning helps to reduce the risks that your small business can face. Business insurance should be part of your business plan.
