What affects the cost of small business insurance?
First things first, what does your business do? Do you work with your hands to build, install or fix things? Do you provide a specialized service or consult? Do you sell products in a store or online? The industry your business operates in will be a deciding factor in what kind of small business insurance you need, and how much it will cost. If you’re a consultant and you store sensitive client information, you may want to consider cyber risk and data breach coverage. If you regularly use a vehicle to deliver products or services to clients, you should consider commercial auto insurance.
The second question you need to ask: how much is your business worth? The cost of your small business insurance will factor in things like the building you operate out of, any inventory you may have, equipment you use, vehicles you operate regularly, and more, depending on the type of business you own. Your insurance coverage needs to match the current value and operations of your business. This can vary from industry to industry. If you’re a graphic designer, you may not have any tools or equipment that require coverage other than your computer. Contractors, on the other hand, will likely have a lot of expensive tools and equipment that they need covered in the event of a loss.
You also need to look at the specific risks involved with a business like yours. The risks that a bakery owner faces will be very different than the risks an electrician faces in their day-to-day. A lot of factors can affect the level of risks involved with your business. For example, its location: if your business is located in a city with a high prevalence of crime, your premiums may be higher to reflect that risk.
The types of products you sell, the types of services you provide, and the size of your business are all contributing factors to how much your insurance will cost. There are no averages because policies can vary, but we can provide some sample scenarios to give you a better idea of what a small business insurance policy would cover in Canada. Each of the following examples fits a different industry, faces different risks and has different insurance needs. Please keep in mind that even if your small business is similar to one of the following sample scenarios, additional factors may apply that would influence your coverage needs.