Understanding insurance can be a long and sometimes boring process. At TruShield, we want to make your insurance experience as easy and painless as possible. We aim to break down any misconceptions you have about small business insurance and help you understand the risks you face so you can protect your bottom line. We understand you’re busy running your own business, so we do what we can to keep things short and simple. Here are 5 key coverage types that every small business owner should be familiar with.
5 small business insurance coverages you should know about
- Commercial general liability
If you’re only going to consider one kind of insurance protection for your small business, it should probably be commercial general liability. It doesn’t matter if you’re a professional services provider, a creative services specialist, a retail shop owner, a contractor or a skilled tradesperson—every small business is at risk for liability claims. Commercial general liability coverage protects against two common liability claims: bodily injury and property damage.
Bodily injury to a third party is a common liability claim against small business owners. It assumes that some sort of negligence took place for the injury to happen, but that doesn’t necessarily mean the negligence was the fault of the business owner. Sometimes, someone may be responsible for their own injury on your property and they could still file a liability lawsuit against you. These lawsuits are expensive and time consuming and could find you financially responsible for costs associated with pain and suffering, medical bills, lost wages and legal fees.
Property damage should be a top concern for small business owners. If you’re found legally liable for damages made to a third party’s property, you could face costly legal expenses and damage your reputation with your customers. For example, if you operate a computer repair centre and a customer claims their computer suffered damage while in your possession, you may face a property damage lawsuit. Incidents that are related to property damage are often grouped with other types of liability concerns in one claim. Often, product liability and property damage will overlap in a single incident.
- Business interruption insurance
Canada has seen some very serious natural disasters over the last few years. The 2013 Alberta floods and the Fort McMurray wildfire are two examples of why business interruption insurance is so important for small business owners. This coverage is designed to help keep businesses going after they suffer a major loss. It can provide financial relief to help cover your bills, payroll and other ongoing expenses until you’re back on your feet. Business continuity planning goes hand in hand with business interruption insurance and is another thing all small business owners, startups and entrepreneurs should consider. It’s important to look at the risks your business faces, and develop a plan with specific steps to help minimize the consequences if you suffer a loss.
- Product liability insurance
Product liability is particularly important for small businesses that provide a product rather than a service. Product liability refers to situations where an issue arises with a product and the source of the problem can be traced back to the business that sold the product. If your business is found responsible for an issue with one of the products you sell, you could find yourself tangled up in a costly, time consuming lawsuit. Your product liability insurance can help protect you from legal and medical costs that may come up in these instances. Common issues resulting in product liability claims include:
- Faulty products
- Products that cause bodily injury to a customer
- Products that cause property damage
- Illness caused by food or beverages
- Professional liability insurance
If your business doesn’t sell any products, but rather provides a professional or creative service of some kind, you should have professional liability insurance. Professional liability insurance is also commonly known as errors and omissions insurance, or when referring to medical professionals it’s known as malpractice insurance. This particular coverage helps protect business owners when clients claim they’ve suffered a financial loss due to an error or omission in the service provided by your business. For example, let’s say you’re an interior designer and you’ve been hired by a new restaurant to design their interior space. Unfortunately, you fail to meet the contracted deadline, which results in a delayed opening date. You might face a lawsuit for the income the restaurant lost due to the delayed opening. Professional liability insurance could help protect you with the costs associated with the lawsuit. Some examples of small business types that should have this coverage include:
- Graphic designers
- Web designers
- Copy writers
- IT technicians
- Financial advisors
- Public relations representatives
- Cyber liability insurance
In the increasingly digital world, the threat of cyber attacks and breaches continues to grow. Many small business owners think they’re not an attractive target for hackers due to their size—but the truth is some cyber attackers are actually targeting small businesses because they aren’t as prepared or well-protected as mid or large-sized corporations. This type of loss will not only affect your bottom line, but your relationship with your customers as well. One study found that 73% of consumers would reconsider doing business with a company if it failed to keep their data safe, and 1/3 said they would close down their online account following a breach or stop dealing with the business completely. Cyber liability insurance coverage can help with costs associated with a data/cyber breach to your computer, network or other electronic system.
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.