Buying business insurance in Canada seems pretty straightforward. You reach out to a broker; they send you a quote, you sign on the line and then you’re insured. Easy, right?
Well, yes, that is until you start flipping through the policy sent over to you by your broker. Words like binder, peril, and rider can trigger a “fear factor” in business owners, leading them to accept the first policy offered without truly understanding what they are buying.
At Zensurance, we’re focused on transparency, and that means cutting down on the insurance industry jargon. First and foremost, at the most basic level, insurance for Canadian business owners protects against risks related to your professional activities, such as a slip-and-fall injury or negligence claim.
While you don’t need to be familiar with the nitty-gritty, it is wise to be familiar with the top ten Canadian business insurance terms to have an informed conversation about insuring your business.
Ten Business Insurance Terms You Need To Know
- Binder: A binder is a document that serves as a temporary insurance policy until the full policy can be issued. As far as you are concerned, as the business owner, you are fully insured unless told otherwise by your broker. Binders are typically issued for thirty days and dissolve once the full policy is issued.
- Certificate of Insurance: Also known as proof of insurance, a Certificate of Insurance is a one-page document issued by your broker summarizing the important details of your policy. You will often be asked for this when you are getting office space, signing a new contract, or getting a loan.
- Deductible: A deductible is the amount of money you, as the insured, pay in an insurance claim before your insurance coverage kicks in. After you’ve paid the deductible, your insurance company will pay you for the remainder of the claim value (up to policy limits, of course). You can adjust the deductible amount in your policy, and the higher it is, the lower your premium will be.
- Exclusion: An exclusion is a statement in your policy that outlines which your policy does not cover conditions or risks. Insurance agreements can be very broad, so exclusions are used to clarify the exact scope of your policy.
- Business Owner’s Policy (BOP): A business owner’s policy (BOP) is a policy package that includes several types of insurance policies at a discounted rate. A BOP usually includes Commercial General Liability Insurance and Commercial Property Insurance, but may also cover several other foundational business policies, like Professional Liability Insurance. A BOP is a good insurance policy for small businesses to consider as it provides a variety of coverages at a bundled price
- Liability: To be liable is to be held responsible by the law. In the world of insurance, liability refers to insurance coverage that protects an individual or business in the event they are sued and found responsible by law for a claim event, such as an injury, malpractice, or property damage. If you are found legally liable, a liability policy will typically cover legal costs and payouts. Intentional damage and contractual liabilities are usually not included. Speak with your broker to understand what the limitations and restrictions of your policy are, or visit CanLaw for free legal information.
- Peril: A peril is a specific risk or cause of loss that is covered by an insurance policy, such as fire, vandalism, or theft. Policies may be named-peril, which includes a specific list of risks, or all-risk, which covers all perils except those expressly excluded.
- Per Occurrence Versus Aggregate: A ‘per occurrence’ limit refers to the total amount an insurance company will pay for one incident, whereas an ‘aggregate’ limit applies to the total amount an insurance company will pay for multiple claims in one policy usually over a year.
- Rider: Also referred to as an insurance endorsement, an insurance rider is an adjustment to the terms and conditions of a policy, such as adding additional benefits or restrictions.
- Premium: A premium is the amount of money you pay to the insurance company for your insurance coverage. The cost may include any commissions paid to the broker, as well as additional feeds to cover the cost incurred to write and manage the policy.
Purchasing business insurance in Canada should not be painful. However, to make a fully informed decision, you are sometimes required to read through long policies and pages of exclusions.
By learning the basics and understanding some of the common insurance industry languages, you can ask the right questions of your insurance provider and feel confident than you have made an informed decision.
How Much Does Business Insurance in Canada Cost?
Much like the industry and types of coverage, the cost of liability insurance for business owners also varies and depends on several factors. When determining the value of your insurance premium, the location of your business, services offered, and annual revenue are taken into consideration.
We’ve partnered with over fifty of Canada’s largest insurance carriers to offer you the most exclusive rates on business insurance.
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