What Do I Need for Small Business Insurance Coverage in Ontario?
February, 3 2022
You may think that running your small business from home carries minimal risks, especially if you do not have a physical location or employees. However, the risks associated with a home-based business are just as high as any other business. Specifically, this relates to your liability and if you are sued. Keep reading for all you may need to know about small business insurance coverage in Ontario.
Home Insurance and Small Business
Many small business owners assume that the liability coverage on their homeowners’ policies is sufficient to cover any lawsuits that may arise from running their business out of their home. However, in the vast majority of cases, it is not. In fact, almost all homeowners’ policies will expressly exclude events related to business or commercial activities. To get a sense of what is and is not covered under a homeowners’ insurance when it comes to your business, let us look at the two major components of a homeowners’ policy:
Property
While a home insurance policy will offer some coverage for business property, it is very limited. Most companies limit the amount of coverage for business property and equipment to $2,500. The cost of electronic equipment to sustain your business alone usually exceeds this amount of money. This limit also only applies to business property kept on your premises. For any transient property (a laptop that is taken out of the home, for example), the coverage limit is even lower.
Liability
The most significant gap in a homeowners’ policy for your business is liability. This is especially true if you have clients coming to your home. If anyone is on your property for business purposes and gets injured, your homeowners’ policy will not cover their injuries. When you consider that lawsuits tend to be incredibly expensive, the result of an injury, even minor ones, can be financially devastating to your business.
What Insurance Do I Need for My Small Business?
If your homeowners’ insurance will not cover your home-based business, what is the best option for small business insurance coverage in Ontario? It depends on the type of business you run and what exposures are present with your business. However, to simplify, there are some standard policies from which almost all businesses can benefit.
Property Insurance
Even if you do not have a physical location for your company, property insurance is a necessity for most businesses. All businesses have physical property related to their day-to-day activities, whether they are selling a product or not. And as mentioned previously, homeowners’ insurance limits business property to $2,500 worth of coverage. Commercial property insurance will cover any business asset, including equipment, inventory, business tools, or furniture. This includes property that is taken off-premises, as well as items in storage. Computers, printers, telephones, and copy machines are all examples of property that can be covered under this policy.
Equipment Breakdown
Like a property insurance policy, an equipment breakdown policy will protect your business assets, specifically as it relates to breakdowns or mechanical failures. This is especially important for electronics, where if not working correctly, it can be quite disruptive to the everyday activities of a business.
General Liability
Since business liability is excluded under homeowners’ policies, there is a significant gap in coverage for business owners who work out of their homes. The best way to bridge this gap is through general liability insurance. If you purchase no other policy for your home-based business, you should at the very least obtain general liability insurance.
General liability insurance covers the cost of lawyers and other legal fees that may result from bodily injury or property damage for which you or your business are legally responsible. It also provides coverage for advertising liability if you are sued for things like libel and slander.
For example, this policy can protect you if a client slips and falls on your property. However, even if you run a business that does not require your customers to travel to you, there are still scenarios that can result in a lawsuit. Consider a delivery for your business, for instance. If the person delivering your goods gets injured, a general liability policy can help with this as well.
Unfortunately, we live in a very litigious society, and the likelihood of a business getting sued at least once in its lifetime is high. Hence, general liability insurance is a way to stop any potential lawsuits from destroying a business financially, and is one of the most critical insurance policies for any small business owner.
Professional Liability
For the professional who provides their expertise as a service, a professional liability policy is an excellent idea in addition to a general liability policy. These policies are also commonly known as errors and omissions policies, and provide coverage for your legal defense in the event you are sued for negligence. A professional liability policy is best suited for occupations such as insurance agents, financial consultants, or accountants.
How Can I Learn More?
For any insurance need, it is essential to consult with the experts. The licensed professionals at Duliban Insurance are knowledgeable, friendly, and ready to help. They have been in the insurance industry for over forty years and know exactly what you need for your small business. Whether you are just getting started or in the thick of growing your business, Duliban can help. Contact them for a quick quote or consultation today!
