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There are literally hundreds of insurance companies in Canada, all of whom offer their own versions of private and commercial insurance, combining to form an industry worth over $170 billion. Many wonder why the industry is so big, and why they need insurance at all. But as many of Canada’s thousands of businesses know, insurance is crucial to protecting your company from the unexpected.
Here we’re going to give you a complete overview of everything you need to know about business insurance, starting with a list of reputable providers. This list showcases some of the most trusted business insurance companies in Canada, and highlights their rates, terms and customer reviews. Click on any of the company names to learn more about them, or read on to have all your questions answered.
Operating a business - of any size, in any industry - comes with an element of risk. You can’t always predict what will happen, and any number of factors may impact your company (directly or indirectly). Insurance is simply a form of risk management; you pay a small fee (or premium) on a regular basis, in exchange for the insurance company accepting financial liability if something happens. The exact nature of what types of events are covered depends on the type of insurance, and your premiums, coverage and limits can all vary.
Business insurance makes up about 15% of Canada’s insurance market - that’s $25 billion - and it is a vital part of the industry. Premiums can range from as little as $40 a month to over $400, depending on the size of your business and how much coverage you have. A standard policy for small to medium sized businesses usually offers up to $2 million in liability coverage. Generally, premiums are calculated by considering the size, age and location of the business, as well as the specific industry, number of employees, past insurance events, and annual revenue.
Companies can purchase insurance to cover all aspects of their business, including:
Commercial property insurance protects physical assets belonging to a business from loss or damage, from any number of causes. These physical assets can be almost anything, including:
In 2019, Canadian insurers accepted $9.9 billion in premiums for commercial property insurance alone, and paid out $6.1 billion in claims.
General liability insurance protects a business from claims resulting from a faulty product or service, or accident. Essentially, if an accident is caused by one of your employees, a service you offer, or a product you produce, or happens on your premises, your company can be held liable for the costs associated with that accident. These costs can be significant, and liability insurance covers both legal fees to defend your company against claims and the funds to pay out these claims.
In 2019, $7.3 billion in premiums was taken by Canadian insurers for commercial liability insurance, and $4.7 billion in direct claims incurred.
Professional liability insurance is a little like general liability insurance, but it specifically covers claims from clients alleging loss or harm due to negligent or inappropriate service. This loss can result from negligence, misconduct or a breach of contract, and this type of insurance is most commonly used by doctors, lawyers, accountants and other professionals providing demanding, high-consequence services. However, anyone providing a product or service to the public can be subject to professional liability claims.
Directors and officers insurance protects against costs associated with issues relating to a director or officer of the board of a company. Directors and officers can be held responsible for many different alleged actions, including negligence, breach of law, or abandonment of their fiduciary responsibilities. These claims can incur both personal losses to the directors or officers in question, and to the company, and this insurance protects against both.
Most types of business insurance cover direct costs - for example, a wrecked company car, or damage to property - but business interruption insurance is revenue specific. It covers the loss in revenue a company experiences due to an unforeseen event. If your business floods, property insurance may cover the physical cost of the damage, but business insurance will ensure you are compensated for the missed revenue while you’re cleaning up.
Cyber liability insurance is a relatively new form of insurance, but a quickly growing field. In July 2019, an IBC poll found that 44% of small and medium sized Canadian businesses did not have any defences against cyber attacks, and 60% did not have insurance to help them recover should an attack occur. This is in spite of the fact that 43% of cyber attacks are targeted at small businesses. Cyber attacks, ransomware, and data breaches are all a day-to-day reality, and this kind of insurance protects your business against any losses incurred because of such threats or attacks.
Commercial auto insurance is simply a business parallel to personal auto insurance. It covers any vehicles owned and operated by a company against accidents, repairs, and more. Fleet insurance is also available for those with multiple vehicles.
Key person insurance is exactly what it sounds like - insurance against your business losing a crucial employee, for any reason. The coverage ensures your company can afford to hire and train a replacement, which is especially useful if you rely on highly specialized skill sets or have individual employees who handle the majority of your workload.
Crime insurance protects a company against illegal actions taken against it by an employee - for example, fraud, theft, forgery, and so on. If you have employees in positions with access to sensitive information, documents, or finances, then this might be worth considering.
Choosing the right insurance for your business starts with considering your assets and potential risks to them. Start by writing out an inventory of everything in your business and its value:
Anything that your business needs or uses may be impacted by some unforeseen event, and so may need insuring. You also need to consider your revenues and business survivability in the event of a temporary closure.
Now you can research companies that offer the type(s) of insurance you need, and check their reviews to ensure their reputability. Your business will want a trustworthy partner! Lastly, compare costs to find an affordable option. Discuss premium reduction possibilities with companies wherever possible. It’s important not to exclude needed insurance coverage for the sake of cost; instead consider combining multiple policies, asking for discounts, or taking steps to reduce risk and therefore cost, to ensure you get the coverage you need.
Companies of all sizes, in all industries, need some form of business insurance to cover them against potentially unlimited losses occurring for any number of reasons. Depending on your company’s assets, employees and industry, these losses may be more likely in one form or another, so there are many different ways to protect yourself.
Business insurance is not legally required in Canada, but it is always a good idea, regardless of your company’s size or location.
The cost of business insurance depends on the size, age, location, number of employees, industry, annual revenues, and past insurance events of your company. The range can be anywhere from $40 a month to $400, and coverage comes with varying limits.
The type of business insurance you get will dictate what’s covered. Property insurance protects property and physical assets; auto insurance protects vehicles; liability insurance protects against accidents, faulty products or poor services; business interruption insurance protects against revenue losses resulting from an incident or accident.
Most businesses do not opt to get coverage for every single type of liability they might face. The most common types of business insurance are property and commercial liability; this means that companies with just these will not be covered for worker’s compensation, business interruption, contractual liability, and so on. However you can always add coverage for specific events or risks, so be clear when researching policies what’s a priority for your company.
Yes, business insurance premiums are considered a tax-deductible expense in Canada.
Yes, and if you run a home business, you should get insurance to cover it. Your personal home and auto insurance will not cover you in the event of losses resulting from commercial activities, so business insurance is a must to protect your vehicle, business equipment (such as laptop, printer and so on) and revenue.
The Smarter Loans Staff is made up of writers, researchers, journalists, business leaders and industry experts who carefully research, analyze and produce Canada's highest quality content when it comes to money matters, on behalf of Smarter Loans. While we cannot possibly name every person involved in the process, we collectively credit them as Smarter Loans Writing Staff. Our work has been featured in the Toronto Star, National Post and many other publications. Today, Smarter Loans is recognized in Canada as the go-to destination for financial education, and was named the "GPS of Fintech Lending" by the Toronto Star.
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