How to Identify the Correct Small Business Insurance

Running your small business can be an exciting and daunting adventure, no matter the industry. Considering all the time, money, and effort you’ve invested in starting and building your small business, you should have a plan in place to protect it. You could eventually face issues that impact your day-to-day operations, not to mention your bottom line. Get some peace of mind and discover the best small business insurance policy for you.

Types of Small Business Insurance

Having the right insurance can help protect you from expensive losses. But with so many options available, you might not be sure which one is right for you. 

To determine your insurance needs, you should evaluate three areas of your small business: your property, operations, and bottom line. Remember that certain areas may need more protection, depending on your business.

Here’s a quick breakdown of the most common types of insurance coverage you might need.

Property Insurance

Do you have a storefront, drive a commercial vehicle, or run your small business from home? Here are the main types of insurance coverage you should consider for protecting your property:

  • Commercial Property Insurance This coverage can help protect your small business property, such as a storefront or workshop. It includes protection for your building, if you own it, and its contents, such as equipment, electronics, furnishings, and inventory or supplies. It may also cover items outside your building, such as signage, fencing, and landscaping.
    • For example, if you own a retail bakery and your stock and equipment are destroyed in a fire, this coverage can help keep replacement costs low.
  • Commercial Auto Insurance – If you or your staff drive vehicles as part of your day-to-day operations, you’ll want commercial auto insurance. This coverage can help cover damages to your vehicles and accident benefits should you or your staff be injured while on the job. Remember, your personal auto insurance policy may not fully protect your vehicle when used for commercial purposes.
  • Home-Based Business Insurance – Do you run your small business from home? Your home insurance policy may not be enough to protect your business operations or business assets, like equipment. Home-based business insurance can help protect many things, such as stolen inventory or customer slip-and-fall accidents at your home.

Operations Insurance

Many common scenarios could result in costly lawsuits, all of which can be covered through different forms of liability insurance. Here’s a breakdown of the primary insurance coverage that can help protect your business’s day-to-day operations:

  • Commercial General Liability Insurance (CGL) – This coverage helps protect your small business if found to be responsible for causing a customer, supplier, or another third party to suffer a bodily injury. It may also protect your business if you or your staff are legally liable for causing damage to a third party’s property.
    • For example, if a customer slips and falls walking up the steps to your store, they could file a liability claim against your business for their injuries.
  • Product Liability Insurance – This can help protect your small business if it’s found legally liable for producing or selling a product that causes bodily injury or property damage to a third party. These issues can lead to costly lawsuits, so consider this type of coverage if your business makes and/or sells a product. Product liability is usually included in CGL policies, but it’s always best to check.
  • Professional Liability Insurance – If you provide any professional service for a fee, consider this type of coverage. It can help protect your business if a client files a lawsuit should they suffer a financial loss that resulted from your wrongful act. 
    • For example, if you don’t deliver a completed project by an agreed-upon date or time, or your client believes the professional services they received failed to meet expectations and resulted in them suffering a financial loss, this coverage can help cover your costs.

Insuring Your Bottom Line

Unexpected losses can come in many forms. While your net income stream could stop or be significantly reduced while you take care of repairs, your continuing normal operating expenses would pile up quickly. There is, however, insurance that helps protect you should you suffer a loss of business income.

  • Business Interruption Insurance – This can help cover your regular operating expenses if interrupted by an insured peril. If, for some reason, you’re unable to generate income, this will help cover things like payroll until you’re able to get up and running again. 
    • For example, if a fire on your property forces you to close your doors until repairs are made or a new location is found, this insurance will help you continue your business until you can reopen.

How Small Business BC Can Help Your Business

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.