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Is Business Insurance Required?

When starting a new business venture, most entrepreneurs do not think about insurance as an integral part of their business. At least not in the beginning stages. Other aspects like product branding and sales take priority, but having business insurance is a sure way of saving a lot of money when unexpected risks threaten your business. In this blog we will consider the importance of business insurance and how integral it is for your long-term success.

What is Business Insurance?

In the most basic sense, business insurance is a term that refers to insurance policies that protect the business owner from encountering risks in their business operation. Common examples of risk include:

  • Property damage

  • Bodily injury

  • Negligence

  • Cyber attack

In Canada, business insurance is not mandatory. However, having business insurance is critical when claims or lawsuits can threaten your business’s survival. The most common types of business insurance in Canada are:

  • Commercial General Liability Insurance: covers costs associated with claims or lawsuits alleging third-party bodily injury or property damage resulting from your business operations.

  • Professional Liability Insurance: covers claims or lawsuits alleging negligence, misconduct, or failure to deliver a service as promised.

  • Product Liability Insurance: covers claims or suits for a third-party injury or property damage resulting from a product you sell or manufacture.

  • Cyber Liability Insurance: protects cybercrimes that may result in compromised data.

Why Get Business Insurance?

As with any insurance coverage, business insurance is there for you when you least expect it.Consider thinking about business insurance as a risk management strategy for your business's success in the event of encountering losses or liabilities. Your needs for business insurance become even clearer when you consider the following questions:

  • Do I have enough money set aside so that I could afford to rebuild if my business experienced a major fire?

  • Can I keep my business afloat while I’m waiting for my delayed stock of product to arrive, or for damaged equipment that runs my business to be fixed?

  • Can I afford the legal costs associated with defending myself and settling a liability lawsuit?

  • How many months can I go without business income while still meeting my financial obligations to my suppliers, employees and the government?

  • Can my business survive a loss?

What Type Of Insurance Is Right For My Business? Costs.

Determining what type of insurance is right for your business is specific to your needs. The type of coverage that your business requires is based on factors such as: industry, business size, and revenue.

Regarding the cost of business insurance, a general ball-park figure for small to medium sized businesses is $1200 annually on a $2 Million General Liability policy. Insurance companies determine the cost of your business insurance premiums based on factors such as:

  • Business size and location.

  • Years of experience.

  • Annual and projected revenue.

  • Number of employees.

  • History of your insurance claims.

At Affiliated Insurance we greatly value your business and we look forward to offering you the right coverage for your business insurance needs. Contact us today for more information and we will gladly help you in business’s success.