Before you can understand what kind of insurance you need for your small business, you need to understand why you need it. You may think your business is too small, or that coverage is too expensive, or that you’ll be covered under your personal home and auto policies should anything happen. These are 3 common misconceptions about small business insurance that can prevent owners from getting the coverage they need, leaving them vulnerable to risk and potentially a loss. We spoke to Executive Vice President of TruShield Insurance, Tony O’Brien, to help get some clarity in these areas.
Tony has over 34 years of experience in the insurance industry in a variety of roles. He began his career in commercial property underwriting, before moving to specialty business. He has developed expertise in areas including extended warranty and captive insurance. Today, Tony plays a vital role in leading different business operations and strategic initiatives for TruShield Insurance.
Common misconceptions about small business insurance
I’m just starting out; my business isn’t big enough to need insurance yet.
“We’ve heard this statement a lot in the small business community. The truth is, no business is too small to benefit from insurance protection. In fact, the smaller a business is, the bigger the financial impact could be if it experiences a loss. Small businesses accounted for $106 billion in exports nationwide and contributed an average of 30% to Canada’s GDP in 2014—those numbers are definitely worth insuring. 40% of businesses don’t recover after a major loss. Without adequate insurance, a fire, customer injury or damage to someone’s property could put an end to your business. Risk prevention only gets you so far. After a loss takes place, it’s strong insurance protection that will help save your company’s future.
TruShield Insurance can provide liability coverage, property insurance and commercial auto insurance so you’re covered in the event of a loss. We also have extensive risk management and prevention expertise to share through our Risk Management Assist program. This gives you unlimited access to our team of Risk Services specialists who can answer questions on how to mitigate the unique risks your business may be facing.”
Business is too expensive and not worth the investment for my small business right now.
“The cost of a loss can be a lot higher than the cost of a small business insurance policy in many instances. Last year was Canada’s most expensive year in insurable damage, largely due to the Fort McMurray wildfire. The total cost of damage was estimated to be nearly $5 billion. That number doesn’t just come from homes, but local businesses as well. It’s estimated that disaster relief from things such as storms, floods and hurricanes will cost Canada over $900 million a year in the next 5 years. You simply never know when disaster might strike, and you need to be prepared.
If your business suffers a disaster like a fire or a flood and you don’t have insurance coverage, you could be on the hook for all of your own repair and replacement costs and suffer a loss of income while your operations are down. The right insurance coverage will not only help with the damage costs, but cover your loss of income until you’re back on your feet too. TruShield is able to offer policies starting at $39 a month. It’s more affordable than you may think, and it could save you thousands in the event of a loss.”
My business will be covered under my personal home and auto policies if anything happens.
“This misconception is more common for businesses that operate out of the home. Home-based business owners often think their home insurance policies will cover them in the event of a loss, but that isn’t always the case.
For example, if someone was visiting your home for business-related reasons, such as a delivery person or a vendor, and they slipped and fell, they could file a lawsuit against your company. In a situation like this, your home insurance may not cover any of the associated legal costs or damages. TruShield’s small business commercial general liability policies are designed to help in situations like this. They protect business owners against liability claims related to third-party bodily injury.
This isn’t only important for home-based businesses. Some business owners use their personal vehicles for business purposes. This can be tricky because there are some key differences between commercial auto insurance and personal auto insurance that may leave you vulnerable to a loss. For example, if you’re transporting expensive goods or equipment for your business in your personal vehicle and you experience an accident—your personal policy will likely coverage any damage to the car, but may not cover any damage or loss to the equipment or goods.
Another key area of risk that small business owners are vulnerable to is cyber risk. Cyber attacks on small businesses are on the rise, and your home insurance policy will not cover the expenses that may be associated with a cyber breach. If you store important employee information, customer information or any other sensitive information on your computer, you’re at risk. TruShield’s cyber event expense insurance can help with data recovery expenses and incident report expenses in the event of a hack.”
Thanks for your insights, Tony! Understanding your insurance needs is an important step in the entrepreneurial process. If you have an inadequate amount or the wrong type of coverage, you could leave yourself vulnerable to risk and even a loss. If you’re wondering what kind of insurance you need for your small business, try our Coverage Coach. Answer a few online questions and get a customized quote with details on the type of coverage you need. Be sure to check back to this blog for more helpful tips and information on how to protect your business from potential risk.
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.