The Different Types of Business Insurance
As a small business owner, finding ways to cut costs and improve profits is always top of mind. While finding ways to manage a budget is important, it’s also a good idea to look for ways to reduce the risk of losses.
One of the best ways to help mitigate risk is to ensure you have ample commercial insurance to provide financing when you encounter unexpected and very expensive challenges.
The right commercial insurance policy will cover varying needs based on the type of business you run, your location and the potential specific risks associated with your product or services.
In order to meet the diverse needs of businesses, there are different types of commercial insurance policies available, which can be customized to cover the specific aspects of your company that put you at risk. Here we look at the different types of commercial insurance available to help you find the options ideal for you.
Why Commercial Insurance is Important
Regardless of your company size, you have assets; whether it’s simply a computer or an inventory of goods or materials required for the products you sell.
Many businesses also have equipment and tools required to provide their services or manufacture their goods. All of these assets are at risk of loss, damage, and theft. Your commercial insurance covers all of the basics of your business, including:
- Damage or theft of assets
- Lost revenues if something happens and you’re unable to remain operational
- Replacement of equipment, materials, tools, inventory, etc.
- Protection for staff injury
- Potential lawsuits from customers
You can then add specific types of insurance to your policy designed to meet the needs of your industry or niche market.
How Commercial Insurance Protects You
As a small business owner, you need protection for your assets, income, and property. Whether you experience a fire, have a break-in, your property is stolen or vandalized, or to cover you in case of lawsuits for damages caused by your product, your services, or your staff.
Without insurance, you could be responsible for damages personally. You need commercial coverage, so you’re not responsible for replacement, legal, and liability costs.
Three Basic Types of Commercial Insurance
Although the list of business insurance types is quite long, the three basic types of insurance every business should have are:
1. Property Coverage
This protects the property and buildings you own for your business. It will assist with costs related to fire, flood, theft, accidents, etc. You have to own the property — not lease it — for this type of coverage, whether it’s retail space, an office, or industrial space. If you rent your business space, your landlord’s insurance will cover damage to the building, but not the contents of your business. In this case, you need content coverage instead of property coverage.
2. General Liability Coverage
General liability coverage protects you if an accident occurs, and you are found negligent. This will cover medical expenses, legal bills, and in some cases, lost income for the injured party. Although you might think this isn’t necessary, you can be sued if someone slips walking by your business property, or if you drop a tool on someone’s foot when working at their home.
3. Business Interruption Coverage
Business interruption coverage, or business income coverage, payout any lost income due to an event such as fire that keeps you from operating. This is important as it can cover several things to help you get back on your feet, from income to money to rent equipment or a temporary workspace.
With these three policies, you are covered for the most common business issues. It is then advisable you customize your policy to meet the needs of your business operation.
If you run what is considered a high-risk business, there are laws in Canada that require you to have Workers’ Compensation coverage. Many businesses, not in a high-risk industry, decide not to go with some form of protection for their staff. Still, it’s always best to cover all your bases and look at your Commercial Employers’ Liability Insurance options.
With this coverage, you’re prepared for potential accidents due to unsafe working conditions. Keep in mind that this can range from outdated electrical to stairs without handrails. You would also be responsible if an employee slips and is injured because you didn’t salt your exterior walkways or stairs.
Finding the Right Additional Commercial Insurance
We can help you come up with the most comprehensive commercial insurance policy based on your niche industry. You want to look at each aspect of your operation so you can cover any possible issues that might arise. Some of the additional policies available include:
1. Commercial auto, fleet and garage
If your business revolves around vehicles from car dealerships to auto repair shops and delivery fleets to car rental dealers, this coverage covers the vehicles on your property as well as your commercial property, equipment and tools, theft, general liability, etc.
Whether you offer overnight accommodation or have a bar on the premises, you need additional protection, which should at least include Host Liquor Liability.
Your business faces many additional risks, from your expensive equipment and tools to a higher risk for accidents on-site. In Ontario, you’re required to have at least $2 million of coverage by law.
4. Errors and omissions and professional liability
Detailed professional services that involve contracts or written work, as well as healthcare providers, need this coverage in case of errors in treatment, advice, contracts, or services rendered that put your client/patient or their business at risk.
This is a major concern for today’s customers and should be important to you if you manage and store customer information. This coverage also applies to your business data. You can choose from many different types of coverage, from Data Breach or Privacy Crisis Management to Network Security Coverage.
6. Employment Practices Liability
Businesses who employ even a single staff member should consider this type of coverage. It protects you from things such as accusations of discrimination or sexual harassment. You can also cover yourself should someone claim they were wrongfully dismissed.
You can also drill down to even more detailed policies, including:
- Long Haul Trucking
- Building Owners
- Condominium Corporations
- Cargo and Imports/Exports
- Ocean Marine Cargo
- Machinery and Electrical Breakdown
- Computers and EDP Coverage
- Business Income Protection
- Business Interruption Insurance
- Commercial General Liability
- Business Risk and Wrap Up Liability
- Directors and Officers Liability
- Pollution and Environmental Liability
- Umbrella Liability
- Association/Group Plans
- Surety/Performance/Estate Bonds
As you can see, your company is at risk for a wide range of damages which can cost you your business.