What business insurance do you need?

Insurance brokers see it all the time. A small business is hit with a lawsuit alleging negligence or a faulty product. The entrepreneur ends up losing a fortune or even goes bankrupt.

“I have dozens of examples,” says Patrick Bouchard, a Quebec City insurance broker and acting chair of the Quebec Insurance Brokers Association.

“Entrepreneurs often don’t get enough insurance. They underestimate the value of their assets or don’t have the right coverage. It can cost you your business.”

Seek the advice of a broker

As well, not having proper insurance can expose you, your family and your employees to financial hardship if you are disabled or lose your life.

Negotiating an affordable, tailored insurance package suited to you and your company is best done with the help of an insurance broker who has expertise working with entrepreneurs.

Ask your broker for a few quotes, and discuss exclusions, deductibles and liability limits to be sure you strike the right balance between affordability and risk protection.

Explore ways to reduce costs

While getting insurance, also take the time to explore other ways to reduce business risks. For example, review your employee training, information technology security and workplace safety policy. You should also make contingency plans to use if an emergency or disaster does strike.

Regularly review coverage

It’s also important to regularly revisit your insurance coverage, especially if your business situation changes significantly.

Here are the main types of insurance that entrepreneurs should consider.

  1. Life and disability insurance—Life and disability insurance policies are important for entrepreneurs so their family and business isn’t at risk of financial hardship if you can’t work for health reasons or pass away.While many entrepreneurs have life insurance, they neglect disability insurance. However, the odds are much greater that you will be disabled during your working life than that you will die prematurely.

    These are personal insurance policies not offered by all business insurance brokers. Before engaging a broker, ask if he or she handles both personal and business insurance.

  2. Property and liability insurance—This is actually two kinds of insurance bundled into a single package—property insurance and comprehensive general liability insurance. Banks often require a business to have this type of coverage when getting a business loan.Property insurance covers loss of business assets such as buildings, inventory, materials, equipment and furniture.

    Comprehensive general liability insurance covers injuries and property damage that occur due to a company’s negligence on its premises or involving an employee. It also covers damage that a customer experiences due to your defective product or work.

  3. Business interruption insurance—If a fire or other calamity forces your company to temporarily stop operations, business interruption insurance covers your lost income.
  4. Combined commercial insurance—Also sometimes known as a business owner’s policy, combined commercial insurance is a tailored package that can include a variety of coverages—for example, property, liability, business interruption and supplementary insurance for “goods in transit” (products that are being shipped).
  5. Vehicle insurance—Company vehicles require separate auto insurance.
  6. Professional liability insurance—Some professionals are also advised to consider professional liability insurance (also known as errors and omissions insurance), which covers them for work mistakes.

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