Although it may not be the most captivating aspect of running a business, insurance is as integral to your success as a product that sells. Taking time to insure your business could save you hundreds of thousands down the road. We know it may be difficult to understand what insurance is or which kind you need, so we’ve collected the top five frequently asked questions about small business insurance we receive to help you get started.

1. What Is Small Business Insurance?

Small business insurance is an umbrella term that describes insurance policies designed to protect business owners from common risks. Some risks they may encounter include bodily injury, property damage, negligence, or cyber-attacks. The most common types of business insurance 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 from cybercrimes that may result in compromised data.

2. Does My Business Need Insurance?

Insurance isn’t mandatory for operating your business. However, it can protect you from the risks you may encounter in your business operations. As an integral part of your risk-management strategy, insurance covers costs associated with claims or lawsuits that may otherwise threaten your business’ survival.

3. What Does Small Business Insurance Cover?

In general, liability insurance provides coverage against lawsuits or claims filed by a third party for bodily injury, property damage, or negligence. Your coverage will vary based on your profession, industry, and operations.

4. How Much Does It Cost?

Several factors, including industry, location, experience, and claims history, are used to determine the cost of your insurance policy. You can anticipate spending around $650 on an annual commercial general liability insurance policy with a $2M limit for a small- to medium-sized business.

5. Do I Still Need Insurance as a Home-Based Business Providing Virtual Services?

While some home insurance policies cover personal items used for work, a business insurance policy is guaranteed to insure where a home policy won’t. For example, if a client injures themselves in your home office or is unhappy with your service, your insurance policy will cover any associated costs.

For more information, check out Zensurance, or our article, Small Business Insurance – Why It’s Important.

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SBBC is a non-profit resource centre for BC-based small businesses. Whatever your idea of success is, we’re here to provide holistic support and resources at every step of the journey. Check out our range of business webinars, on-demand E-Learning Education, our Talk to an Expert Advisories, or browse our business articles.