Do you need small business insurance? Here’s why you might.

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small business insurance

One of the key pieces to owning a successful small business is building a strong reputation. You want your company to be trusted and known for its expertise and excellent products or services. Not having proper insurance coverage not only puts you at risk in the event of a loss but can also threaten that reputation with your clients. For example, if you’re an electrician and a prospective client asks to see proof of your liability insurance coverage, to which you reply, “What’s liability insurance?”, they may second guess doing business with you. It would be similar to visiting a bakery to order a cake, to which the baker replies, “What’s a cake?”  You’d likely find another quality establishment to purchase your baked goods from. Situations such as these can lead to a customer losing faith in your company.

A customer asking for proof of insurance isn’t the only situation where you might find yourself looking for coverage. If you’re hosting or participating in an event, many venues will ask for proof of liability coverage. A very common scenario relates to business owners renting or leasing a commercial space. Don’t get caught with your pants down—get the coverage you need before you’re asked for it.

5 moments that make business owners realize they need insurance

1. Don’t stop the party!

Participating in networking events such as trade shows or farmers markets can be very beneficial for small business owners. You have the opportunity to meet likeminded people often in the same industry as you. These types of events can be used to discuss challenges and solutions with one another, which can help further your growth as a small business. Hosting events for your customers or your employees can also be a great way to stimulate growth within your company. It shows your appreciation for their loyalty and hard work.

The benefits of participating and hosting events as a business owner are vast, but in order to do so, you’ll often be asked to provide proof of insurance coverage. Typically when a venue hosts a business networking event or tradeshow, the participants will be asked to produce proof of insurance for a certain amount before they’re granted access. The amount and type of coverage required will depend on the specifics of the event. For example, if alcohol is involved, participants will often have to add alcohol exposure coverage to their policies. This type of situation is very common for retail and not-for-profit businesses. Some events that may require participants to have insurance include:

  • Tradeshows
  • Conventions
  • Job fairs
  • Award presentations
  • Company gatherings
  • Speaking engagements

Typically when a venue hosts a business networking event or tradeshow, the participants will be asked to produce proof of insurance for a certain amount before they’re granted access.

2. Signing your first commercial lease.

When your startup begins to outgrow its surroundings, you may find yourself looking into renting or leasing your first commercial space. This can be particularly common for retail small businesses, tech startups and real estate brokerages. When reviewing the lease documents, you’ll likely find a clause requiring you, the tenant, to have insurance, including commercial general liability (CGL) insurance. This type of coverage protects the insured against claims of personal injury to a third party, or property damage to a third party for which the business is found legally responsible for. If you already have small business insurance prior to signing your first commercial lease, you should contact your insurance company to notify them that you are leasing a location and to change the terms to include any additional coverage you may need.

3. With new customers come new responsibilities. 

The Canadian consumer is a savvy one. They often know what they want from a company, and what they don’t want. Proof of insurance can be requested by any client or customer you encounter, and not being able to provide it may make them question your credibility and reliability as a company. This can be common when signing contracts with larger clients or partnering with other companies.

What is a certificate of liability insurance? Generally speaking, it will be a single sheet of paper that provides key details on an insured party’s policy. It’s proof that your company has insurance and provides insight on the limits of your policy. It will also typically include key details like your company’s name, a policy number, the type of coverage purchased, the effective date and the expiration date. Because all of this information can be found on one single page, your certificate of liability insurance can be a valuable asset when pitching to clients for new business.

Proof of insurance can be requested by any client or customer you encounter, and not being able to provide it may make them question your credibility and reliability as a company.

Important to note: Your certificate of liability coverage only acts as proof of insurance and can’t provide any of the benefits of the policy it represents. You also need to ask your broker or insurance provider for this document—it won’t be provided automatically once you’ve purchased your small business policy.

4. When you buy expensive equipment.

Imagine you’re a contractor and you’ve wanted a brand new electric saw for quite some time. It will make your job easier and your finished work better—but it’s pricey. When you finally decide to take the plunge and buy that expensive piece of equipment, are you not going to protect it the best you can? Nearly every small business relies on some sort of equipment to get the job done. You should have insurance for those key pieces, whether it’s property insurance, equipment breakdown insurance or commercial auto insurance—you want to protect the things that keep your business going.

Property insurance is designed to protect the building you operate out of and everything inside as well. Commercial property insurance can help protect you from losses associated with your expensive equipment when the damage is caused by external sources. For example, if you own a woodshop, and a fire destroys one of your expensive sanders, you could look to your property insurance for coverage.

Equipment breakdown insurance will help when your equipment is damaged by internal sources. Things such as mechanical or electrical breakdown, derangement and centrifugal force would typically be covered by an equipment breakdown policy. Mechanical and electrical breakdowns are common for small business owners. For example, let’s say you’re a retail shop owner and it’s holiday shopping season. What would you do if an unforeseen power surge caused damage to the electrical heating system in your store causing it to stop working? Your property policy may not cover this, and without equipment breakdown coverage you could face costly repairs.

Commercial auto insurance will not only provide coverage if an accident damages your company vehicle, but it can also protect expensive products or equipment you may be transporting in the vehicle. For example, maybe you’re a contractor that frequently travels from jobsite to jobsite with your expensive tools in the car. If you’re involved in an accident that results in damage to those tools, your personal policy would cover the damage to the vehicle but may not help with the repair or replacement cost of your tools. A commercial auto policy is designed to help in situations such as these.

5. Expanding your talent.

As your business grows, you may find yourself needing a little more help. Hiring new employees can be an exciting process and can help relieve your workload as an owner. But talented and hardworking employees don’t want to work for just anyone—they look for companies that treat them well and help protect them and their loved ones.

By providing a strong group health insurance plan, you’ll be able to recruit top talent, maintain your employee satisfaction and keep your business competitive.

Whether you’re participating in an event, signing your first lease, or trying to protect your expensive equipment—you need small business insurance. Don’t get caught without coverage at a bad time. Develop trust and loyalty with your customers by presenting yourself as a credible, trustworthy company with strong insurance protection.

The resultTwitter polls are in!

We asked small business owners like you when they first realized they needed small business insurance. It turns out that networking events were the most common situation that prompts entrepreneurs to look into getting small business insurance.

Looking to get covered?

Not all heroes wear capes—some have shields. If you’re looking for comprehensive coverage for your small business, check out TruShield. Our policies are designed to meet the needs of Canadian startups, entrepreneurs and small businesses. Get started by answering a few online questions to get a free quote, or give us a call at 1.844.285.6910 to talk to one of our representatives today.

Don’t get caught without the right coverage.

This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information. Terms, conditions and exclusions apply to coverage. See policy for details.