When you operate a small commercial establishment, wanting to save money in every aspect is understandable. But insurance should not be an area that you compromise.
Not having adequate insurance coverage for your business can be one of the most significant pitfalls. Small business liability insurance Canada protects you from financial consequences that could arise from various factors.
You can look into flexible and affordable insurance plans for your business based on its unique requirements.
Why Do Businesses Need Insurance?
As an entrepreneur in Canada, it is crucial for you to have ample protection of your assets.
You could be facing legal repercussions as a result of delivering a defective product. The client could be dissatisfied with the outcome or allege negligence on your part while performing a service. Or someone could sustain bodily injuries after using your product.
Your business liability insurance protects you from the adverse consequences of these lawsuits. Some policies cover the legal expenses and attorney fees, besides the compensation given to the petitioner.
Also, you are contractually obligated to have one if you enter into an agreement with potential clients or deal with vendors and suppliers. Evidence of insurance shows that you run a credible business and improves your trustworthiness.
How Much Should You Spend on Insurance?
The cost of your small business liability insurance Canada can depend on various factors like the industry and your claims history.
To determine the coverage you need, consider:
Every business is unique. One may be fixing broken things, while others build or renovate buildings.
Depending on whether you sell items at a retail store or provide specialized services, the kind of insurance you need differs. For instance, medical professionals need errors & omissions insurance, whereas businesses relying on technology should get cyber liability coverage.
If your business facility houses expensive equipment, insurance will cost more than someone who works with basic tools of the trade.
Likewise, an electrician faces more risks than an architect in their daily operations. Besides, if you are located in a city with higher costs of living or crime, it could raise the insurance premiums.
The total value of the business depends on the equipment, property, vehicles used for commercial activities, inventory, etc.
Also, each industry and the niche target market affect the insurance rates. Suppose the property is damaged or goods are stolen; then, a factory owner has more to lose than a confectioner.
These primary factors cover the base costs associated when issuing business liability insurance. Insurers arrive at a rate based on business activity and other factors. However, limits, endorsements, and deductibles are applied after finding the baseline premium.
Annual premium= rate X annual projected revenue
Here are the approximate liability insurance costs for $1M limit:
• $350-$1,500 if the annual revenue is under $100,000
• $1,500-$2,500 if the annual revenue is more than $100,000 and below $500,000
• $2,500-$4,000 if the annual revenue is between $500,000 and $1,000,000
Overpaying and underpaying for insurance are huge mistakes business owners make. Instead, compare different plans to find the right policy or speak to an insurance broker.