Does your small business, startup, or profession need to be insured? Do all businesses need insurance? Our view is ‘yes’ because anytime you conduct a transaction with a customer, it exposes you to any number of costly liability risks.

Some professions legally require a specific amount of insurance, such as an accountant or a medical professional, like an optician. 

For other types of businesses or professions, it may not be a legal requirement to have business insurance. But it’s advisable and highly recommended to have coverage to protect yourself from financial losses if you are sued for alleged negligence, mistakes, or other claims, such as a customer suffering an injury on your premises from a slip and fall.

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Regardless of whether you’re legally obligated to be insured, know that you can deduct all ordinary business insurance premiums on buildings, machinery, and equipment when filing a tax return.

What Insurance Do I Need for My Business?

The type of insurance policy that suits your profession or small business best depends on many factors, including what you do, where your business is located, the products and services you offer, and your annual and projected revenue.

For example, a general contractor’s insurance policy typically includes general liability insurance, and tools and equipment insurance.

Meanwhile, a retail insurance policy will likely include general liability insurance, product liability insurance, commercial property insurance, and cyber liability insurance.

If you’re unsure what coverage your policy should include, talk to one of our friendly brokers. They can advise you on what you need to cover your business adequately.

How Much Liability Insurance Do I Need?

Likewise, knowing how much coverage you need comes down to what you do and the potential risks your business faces. Some of the factors to consider include:

  • Legal Requirements

Some industries and provinces have specific legal requirements for minimum liability insurance coverage.

  • Contractual Obligations

Review the contracts you have with your clients, suppliers, or landlord if you rent or lease a commercial space. Those contracts might require you to have a certain level of general liability insurance.

  • Your Business’s Assets

Consider the value of your business assets. Think of your physical assets, such as your inventory, equipment and other types of property, and intangible assets, such as intellectual property. Doing a contents inventory of the physical assets you own may be worthwhile. You want enough coverage to protect these assets in case they are destroyed by a fire.

  • Potential Legal Costs

Consider the potential legal costs associated with a lawsuit or legal disputes, including your legal defence fees, court costs, settlements, or potential judgments against you. Of note, a 2022 study shows seven out of 10 Canadian small businesses have dealt with at least one legal issue in the last three years.

  • What Your Risk Tolerance Is

Evaluate your risk tolerance. Some business owners may want higher coverage limits for peace of mind, while others may be comfortable with lower limits. A Zensurance broker can advise you on what coverage limit is right for your business.

4 Things Detailed in Every Business Insurance Policy

Typically, four main parts of a business insurance policy document pertain to filing a claim

These items in a policy are worthwhile to understand because they effectively outline what you can file a claim for and how much your insurance provider will pay out:

1. The Declaration

The declaration page contains basic information about your business and the policy itself. It includes the policy number, effective dates, premium amount, and a summary of what you are covered for including your limits of insurance.

2. Insuring Agreements (Coverage Details)

The coverage details portion of your policy outlines the specific types of coverage you have. It describes what your insurance provider agrees to cover after you file a claim regarding losses, damages, or injuries.

3. The Policy Conditions

The policy conditions outline your and your insurance provider’s obligations and responsibilities. Think of it as what you must do to maintain your coverage and what you must do when filing a claim. It’ll also detail the legal conditions an insurer must follow. It may include provisions related to notice of claims, cooperating with an insurer’s investigation, and dispute resolution procedures.

4. Exclusions and Coverage Limits

An exclusion specifies what is not covered by your policy. This part of your policy lists situations, events, or types of claims that the insurance provider will not provide coverage for and defines your coverage limits.

How to Get Insurance for Your Small Business Quickly

Zensurance can help you quickly get the low-cost business insurance policy you need and a certificate of insurance.

Take a few minutes to fill out our online application for a free quote. Our knowledgeable brokers will shop our partner network of over 50 insurance providers to find the right policy and customize it to suit your specific requirements.

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About the Author: Ryan Insalaco

Ryan Insalaco is a licensed broker and Practice Lead, Digital Solutions with a background in medical malpractice insurance at Zensurance.