Why do I need business insurance?

Your business may have many assets: vehicles, office space and equipment, inventory, an indispensable employee or partner, and, most importantly, yourself. To protect these assets and to protect your business from potential risks, you should consider getting insurance.

All businesses take some risks but taking too many risks or failing to protect yourself does not make good business sense. Could your business survive if one of the partners dies or becomes disabled? Would you have enough cash on hand to deal with any business emergency that could arise? In many cases, the answers to these and other questions about risk is "no".

This document will help you understand the different types of insurance that are available to protect you and your business from potential liability.

Types of insurance

Insurance needs vary greatly, and it is best to get advice from an insurance broker or agent who is familiar with your specific type of business. Below are different types of insurance that may apply to your business.

Insurance for owners, partners, and key employees

The loss of a key person can devastate your business and your livelihood. These types of insurance can help protect your business and your family from potential risks:

- Life insurance
- Disability insurance 
- Partnership insurance or buy-sell insurance 
- Critical illness insurance 
- Key person insurance

Speak to your accountant to find out which of these are deductible as business expenses and which ones you will need to pay for yourself as an individual.

Insurance for business property and earing

You need to protect your assets and earnings if a disaster or emergency destroys part or all your business premises and assets. This could include:

Property insurance - Property insurance will cover the property and buildings owned by your business in the event of destruction or damage due to things like fire and other perils.

Contents insurance - This covers asset that you store at your business premises. If you are leasing space for your business, the owner of the property probably has property insurance, but you are likely responsible for your own content’s insurance. If you run your business out of your home, you will likely need separate contents insurance for your business assets.

Business interruption insurance - If you need to shut down your business temporarily due to a fire or other peril, business interruption insurance will cover your loss of earnings until you are back in business.

Vehicle insurance - You will need to insure any vehicles that your business owns. If you use personal vehicles for business purposes, be sure to advise your insurance company.

Liability insurance

Mistakes happen. You, your employees, your equipment, or your suppliers could be the cause of mistakes that ultimately end up hurting your customers, your employees, or other people who are involved with your business. To protect your business from being sued, you should consider these types of insurance to limit your liability:

General liability - Covers injury to clients or employees on your premises

Product liability - Provides protection in the event that your products are defective or cause serious harm to those using them

Professional liability insurance - Provides protection if you are sued by a client for errors, omissions, or negligence when performing professional services

Cyber liability - protects in the event of a lawsuit stemming from an electronic security breach involving compromised personal or commercial information. Can include situations relating to the theft of devices containing organizational, client, employee, or similar data.

Get the right insurance for your business

Making sure you have the correct business insurance can provide peace of mind. To discuss your business insurance options, contact an insurance representative to find or develop a plan that is right for you and your business. You may also wish to contact your local chamber of commerce or industry association, as some organizations offer members lower rates on their business insurance.