What Is Commercial Liability Insurance in Canada?
If you are a business owner in Canada, consider the following potential situations. What would happen if one of your clients, customers, or employees were to slip and fall on your business property resulting in an injury? What would you do if a natural disaster such as a fire or flood were to destroy your business?
As a business owner, not only are you held responsible for running your own business, but you also run the risk of losing your business if it’s not protected correctly in the case of an injury or natural disaster. So, what is the solution? This is where commercial liability insurance protects your business. Along with commercial liability insurance, there is also general liability insurance.
Let’s take a closer look at five of the most common questions surrounding commercial liability insurance in Canada that you should understand. First, let’s define what commercial liability insurance is and clarify the difference between general liability and commercial liability insurance. We will also discuss what is covered under commercial liability insurance, what types of businesses should have it, and other business insurance options you should consider.
What is commercial liability insurance in Canada?
Commercial liability insurance in Canada is a specific type of business insurance meant to protect you and your business from injuries and hazards on your business property. Let’s use the example of an employee injuring themselves while working on your business property. If the employee files an injury claim against your business, your commercial liability insurance will cover legal costs and damages if you are held liable.
What’s the difference between general liability insurance and commercial liability insurance in Canada?
There is no difference between general liability insurance and commercial liability insurance. These two terms are used interchangeably in the insurance world and provide the same coverage.
What is covered by commercial liability insurance in Canada?
When your business has a commercial liability insurance policy, here are the everyday situations that are covered.
1. Property damage caused by third parties
This occurs when damage is done to the property of another business. For example, a landscaper accidentally damages the building sitting next to the one he was initially hired to work on.
2. Bodily injury causes to third parties
This is a typical case where an employee, customer, or client injures themselves while visiting or working on your business premises. For example, an employee or client slips on your business property and breaks their leg or injures their back.
3. Products liability
Product liability cases are usually in the restaurant and automobile industries. Usually, a specific defect existed in the product sold to the customer and caused bodily injury or property damage. For example, a driver gets into a car accident, and the airbag doesn’t deploy, causing the driver serious injuries or death. In the case of a restaurant, a customer gets salmonella after eating a spoiled chicken meal.
4. Completed business operations
A work order has been completed under a contractual agreement on a single or multiple job site, and the finished product or service is faulty. For example, an electrician installs light fixtures in a new condominium, and the light bulbs spark and burn, causing a fire in the building.
5. Cost of defence law representation
In cases where bodily injury or product liability occurred on your business, legal action may be sought by the employee or customer. While you are getting sued, you will need defence law representation. When you have commercial liability insurance, the policy will cover the costs to hire defence lawyers. You won’t have to pay out of pocket.
6. Court settlements and damages
If the federal or provincial court decides that you were found negligent and imposes penalties on your business, your commercial liability insurance will cover these costs. For example, the local court chooses to award a settlement to an employee who injures themselves at your workplace. Your policy will pay out the court settlement.
7. Tenants legal liability
Tenant legal liability applies to small business owners who have brick and mortar locations. In this case, the small business owner is the tenant in the building they are renting or leasing their store or unit space from a landlord.
As the tenant, you accept responsibility if any damages are caused to the business establishment you rent. For example, one of your employees accidentally leaves a window open overnight during a thunderstorm. The next day the office is flooded, and the rain damages some office furniture and computers.
What types of businesses need commercial liability insurance in Canada?
The majority of businesses that are open to the public and sell goods or services of any kind need to acquire commercial liability insurance.
Here are examples of the types of businesses that should get commercial liability insurance:
- Building owners
- Childcare and daycare providers
- Dance studio owners
- Food Trucks, Carts & Trailers
- Gym owners
- Home-based contractors
- HVAC Contractors
- Medical professionals
- Hair salon and spa owners
- Sports arena owners
What other types of business insurance are available?
Depending on your business, you might need additional business insurance policies. Here are the standard options of insurance to consider:
Cyber-Theft Liability Insurance
Cyber risk and data breaches occur every day within information technology companies that offer cloud services and online services. Cyber liability insurance is designed for protecting small businesses that are targeted in cyber hacks.
If you run a consultation business, professional liability, also known as errors and omissions coverage, is essential. For example, suppose one of your clients or customers claims your professional consultation caused them losses in finances. In that case, your professional liability policy can help you recover finances if you were to get sued.
Property insurance is essential for contractors, landscapers, electricians, medical professionals, and plumbers who rely on your property to store tools, equipment, and technology. If one of your tools or equipment gets damaged or breaks down and requires repair, your business operations are stalled. Having property insurance will cover the repairs or replace the tools or equipment that have been damaged.
Commercial Auto Insurance
If your business is a delivery service or you and your employees need to drive your car to conduct your business, you should consider commercial automobile insurance. This should not be confused with your car insurance. If you are using a car or truck designated explicitly for running your business, your car insurance might not cover you or your employees.
Now that you know about the different types of business insurance policies and why commercial liability insurance is essential for any business. It protects your business if you, your employees, or customers get injured on your business property. If you’re a retailer or restaurant, commercial liability insurance can cover court settlement costs due to faulty products or sickness caused by spoiled food.
To learn more about commercial liability insurance, call Goodison Insurance at 1-800-403-7703 or contact us here.