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Business Insurance in the Canada

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Interesting facts in articles from the financial community.

Any entrepreneur knows that in business it is very difficult to predict what the company expects in the near future. It depends not only on the economic and geopolitical situation in the country. Even a small accident could well lead to problems up to business breakdown and bankruptcy. As a result, the entrepreneur will not only suffer losses, but will also be left with a bunch of debts. Therefore, insurance of a business in such a situation is a reasonable solution.

What is business insurance?

With the help of correct business insurance, there is an opportunity not only to save your capital, but also to continue the stable operation of the enterprise. Usually all circumstances are included in the insurance contract, including damage to the property of third parties, as well as errors and injuries.

For business owners, a variety of insurance packages are available. You can choose a separate set of insurance services that will be focused on the specifications of a particular business.

The biggest mistake of first-time entrepreneurs is this: they don't believe there can suddenly be a fire or a major accident will occur. Everyone believes that suppliers can not cheat them, and partners do not “fool” others in money matters. This is the reason that in the end the business simply breaks up, and the entrepreneur becomes a bankrupt.

Therefore, in essence, business insurance is an “airbag” that gives peace of mind and understanding that, in case of unforeseen circumstances, there will be an opportunity to compensate the damage with payments.

Why business insurance is necessary?

You can issue an insurance policy for everything: commercial property, general responsibility, as well as simply to insure yourself against certain mistakes and omissions. The advantage of commercial insurance is that it covers a huge number of risks ranging from the smallest to fatal problems.

Therefore, do not immediately reject the proposals of various insurance companies. It is important to choose the most correct and reliable insurer, which guarantees payments in case of an unforeseen situation. As a result, insurance savings can cost too much.

Cost of a business insurance

It is very difficult to provide an exact price. The cost depends largely on the type of business, as well as the package of services that may be required. If the enterprise itself is small, and all the work is carried out in the house and with a laptop, then the policy will be cheap. But the package of insurance services for a company where employees work, where there is expensive equipment, a separate room, workshops, will be quite different in cost.

Important! The larger and more complex the business, the more risks it has, consequently, insurance services will cost more.

In any case, the cost of business insurance is always individual. Most often, the price will be in the amount of 1% of the cost of everything that is insured in this company. If the company has a car fleet, then there are additional risks of theft, accidents, breakdowns, and this also affects the final cost of insurance.

Reference. On average, for small business owners, the policy costs between $500 and $5,000 a year. At the same time, small business owners should remember that with the expansion of activity and the increase in the scale of production, the cost of insurance will also increase.

Common varieties of commercial insurance policies

Business insurance is very different in forms, and each entrepreneur can choose the most suitable option for himself. It depends on the form and scope of the business, as well as on the amount that the businessman is willing to spend on the purchase of an insurance policy.

Commercial Real Estate Insurance

This is the most common and most necessary type of insurance. Any business that owns physical assets and equipment must insure their commercial property. The standard policy in this case includes protection against flooding, fire, theft, vandalism. Any of these situations can seriously harm a business, up to its complete destruction. To understand what kind of package of services is necessary, it is enough for an entrepreneur to calculate how much his property costs and how much repair will cost in a sudden natural disaster.

Important! Even a small home business can turn into big losses without insurance. Moreover, home insurance will really not be enough, in any case you will have to protect assets further.

Under the insurance contract of a commercial property, it may include:

  • the building itself, as well as all the surrounding buildings;
  • material values;
  • money in the storage and safe;
  • all equipment: computers, scanners, printers, medical and production equipment;
  • interior items.

As a result, due to unforeseen circumstances, the insurance company will pay the cost of the affected equipment, and the entrepreneur will be able to continue his or her work further.

Liability insurance

This is another common type of businesses insurance. Such a policy provides protection against possible claims from employees and customers. If an employee of your company is injured during work, the insurance policy will be able to cover all necessary payments, and in this case you can avoid lawsuits and, accordingly, avoid all subsequent problems.

Attention! The same applies to all claims from customers. If the customer received, for example, redness and skin problems from improperly selected funds in your beauty shop, his or her claims will be paid not by the beauty shop, but by the insurance company, if there is a civil liability insurance policy.

Professional liability insurance

Similar to the previous type of insurance, but there are some differences. This policy covers the consequences that arise from the customer as a result of receiving services or following the recommendations of the specialists of your company.

For example, if as a result of your accountant's advice, a customer lost a significant amount of money, then they can make a claim to the company and file a lawsuit. If your company has professional liability insurance, then the amount of payments of insurers will cover all claims, you will have a good reputation, and the client will receive the compensation he or she needs for your mistakes and omissions.

Professional professional liability insurance is most often required for those entrepreneurs whose work can cause serious financial losses to the client, such as lawyers, economists, consultants and medical professionals.

There is a number of professions, entrepreneurship in which involves compulsory insurance of professional liability. These include:

  • notaries;
  • customs brokers;
  • evaluation companies;
  • warehouses;
  • arbitration managers.

In the rest of the professions, this type of insurance is voluntary, but in any case, it is better for specialists in these fields to have an SPO policy on hand, so it is possible to avoid many problems arising from professional mistake. Each specialty has its own set of situations in which payments occur according to the policy under consideration. For builders, that is:

  • selection of non-compliant building materials;
  • calculated inaccuracies of design;
  • errors when calculating the load on supporting structures.

For doctors, payments occur if the health of the patient is harmed due to errors in the labor process.

Commercial auto insurance

Commercial auto insurance is necessary if transport is involved in business processes and when it is broken or hijacked there is a serious problem, resulting in losses. It can be a transportation of people, delivery of goods, taxi service.

Reference. The holder of the commercial auto insurance policy can expect to pay for any repair work, receive compensation in case of carjacking, also insurers can temporarily replace the car until the company's transport is under repair.

But the most important thing is: if your company's car injures someone or damages third parties, then insurers will also help to avoid loss of reputation and lawsuits, they will simply pay for repair to the third parties, for treatment and other damage related to the accident.

If you have more than 5 cars in the company, then it is, in fact, already a car fleet, and in any case, it will be cheaper to issue a commercial car fleet insurance policy than make an insurance for each car separately.

Another plus in the direction of commercial auto insurance is hired drivers. They do not always carefully treat the company's transport (that is not their car after all), so often repairs can be quite sudden. Having a policy will cover unforeseen costs.

Cybersecurity Liability Insurance

Of all varieties, this is the most modern and new type of insurance. In today's realities, a huge number of work operations take place over the Internet. Therefore, almost every company has its own base of clients and other information stored on the World Wide Web.

Reference. The cybersecurity liability insurance policy provides an opportunity to avoid losses that involve a hacker breaking into databases and stealing information. Also, the insurance policy protects all software used to keep records of income and expenses, to bill clients, all payment portals of the company.

The cybersecurity insurance policy has different coverage options. When a database is hacked, the company can pay for credit monitoring as well as for the majority of the legal costs. If the information is taken away by hackers for ransom, then insurance providers can pay for it.

Business industries such as retail, medical shops, where there are customer databases, but there is no robust protection like in large institutions risk the most.

The cost of cyber insurance depends on the number of services: for example, not every insurance provider offers insurance against fraud using social engineering. For a small company, such a insurance policy starts at $200 a year and more depending on the volume of services.

Liability insurance of managing directors and officials

A third of all companies on the planet, from the smallest to the largest corporations, have faced managing directors and officials liability lawsuits in the last 10 years. In such lawsuits, among other things, the personal assets of those responsible are also at risk.

Managing directors and other managers can be sued not only by disgruntled customers, but also by employees, suppliers, partners of the company. Also, send documents to the court not only by individuals, but also by government regulators as well as competitors. Large companies can easily survive such lawsuits, but for small and medium-sized businesses it can be fatal.

Crime insurance

This type of insurance also has other names: insurance against dishonesty and infidelity of employees, and against commercial crime. The insurance policy covers those risks associated with dishonesty of business employees. These are people who are contracted and officially employed by the company, receive a salary and carry out the administration's instructions. The contract must list all the premises of the firm that are marked as an insurance area, as well as all valuable equipment. The crime insurance policy covers the costs of the following incidents:

  1. Theft comitted by an employee, alone or as part of a group, to cause damage or gain an advantage.
  2. Theft or robbery committed by third parties against an employee, but not against a security or watchman.
  3. Forgery of signatures, making edits to bills, checks and other payment papers.
  4. Computer theft or money transfer using a fake order.
  5. Acceptance as payment of fake money as well as fake payment documents.

A dishonest employee could lose the cash on delivery to the bank, use the company card given to him or her for his or her own purposes or simply endanger the security of the computer network.

If an employee tries to steal company data, frame the business, it could cause huge losses, and none of the entrepreneurs can be sure that this will not happen to him or her. You need to be wary of such risks and think about them in advance.

Key Person Insurance

In another way it is called business life insurance. This type of policy becomes necessary if a key employee of the company can no longer perform his or her duties or dies. Most often this applies to the owners of a small company, who can simply let their own business down to bankruptcy because of illness. If something happens to a key person, the policy will cover problems caused by malfunctions.

Important! The cost of the policy will depend on which types of insurance it includes (life, serious illness, disability), and also on the type and amount of production.

Insurance against production break

It's clear that little business can operate around the clock, and in any case there are weekends and holidays. But in every line of business, unforeseen circumstances can arise that interrupt the company's work for a few days or weeks. As a result of downtime, the entrepreneur will suffer a number of losses, will appear unplanned expenses for compensation, and regardless of downtime, you need to borrow money for the employees salaries, payments to revenue officers and lessee. The insurance company will help to compensate all these costs.

Reference. During a fire, the company is able to stop for several months. If there is commercial property insurance, the insurance providers will pay for the repairs, but not for the benefit the entrepreneur missed due to the downtime. If there is a policy from the production break, the lost profits will also be restored. The policy will cover taxes' expenses, employees, as well as payments on credits or loans.

How to buy a cheap insurance for small businesses online?

To get cheap insurance, you should carefully pick up the insurance provider. The algorithm is the following:

  • to compare prices for the necessary type of insurance of several insurance providers, the cost may vary greatly, so it is better not to be in a rush;
  • to combine the necessary services - it is better to order different commercial insurances from one insurer, so that it would be more profitable;
  • to assess all possible risks - it is important to exactly choose the types of policies that meet the needs of your business;
  • to take care of risk prevention - if it is possible to exclude certain types of risks, then you can save money;
  • to search for a group rating - here you can find the right insurance provider for your niche.

Only after a thorough analysis and assessment of risks, as well as the selection of an insurance company, you can call and learn about discounts, and then sign the contract.

Classic mistakes when buying a commercial insurance policy for small businesses

Experts do not advise you to purchase the entire range of insurance from the same service provider, if there are no separate conditions or discounts for you. In any case, first you need to compare the maximum number of insurance providers and evaluate all their offers and conditions.

Important! The insurance broker works and gets paid from commissions sold insurance policies. Therefore, do not agree to the first offer. In any case, it is important to check and analyze other products to save money and not overpay for insurance policy.

In any case, it is worth remembering that your insurance broker is required to answer your questions, he is an expert and not just a seller of insurance. You should find out if the rate will fall or increase in the future, and what discounts you can expect. If the insurance provider does not suit you - do not renew the contract and look for a more reliable option.

What affects the final cost of a small business insurance?

Usually the larger the business is, the more various risks it has, and therefore, for large companies, full insurance is always more expensive. But, its cost is influenced by a number of factors, as a result, the policy price can be quite acceptable:

  1. A type of commercial insurance policy. There are many different types of insurance coverage. More often, small companies start with a liability insurance to protect themselves against third parties who will have to pay damages. The larger the company becomes, the more risks will be and the price of insurance coverage will be higher.
  2. Commercial insurance limits. For each type of coverage, there are limits. The higher the limit is, the larger the amount of coverage and higher the cost of the policy is. It is best to discuss the best possible limit to avoid overpayments and underinsurance with an insurance broker.
  3. Franchise requirements. The franchise is the amount of money the business owner has to pay before the insurance providers pay him or her out the balance. More often a large franchise entails a small bonus.
  4. Business size. The more assets and property a business has, the more expensive it will cost to insure it.
  5. What industry does business work in. The more risks there are, the more expensive the insurance is. Also, the policy will become more expensive if there is a valuable equipment.
  6. Where the company is located. First of all, the risk of various disasters is assessed: whether there could be an earthquake in the area or a hurricane. If the business is located near the water, insurance against flooding is mandatory. It's all are extra costs.
  7. Annual income. There is a direct proportional relationship here - the higher the income is, the more expensive the insurance is, because the damage, paid by the injured party is always comparable with the size of the company.
  8. Insurance record of business. If your insurance providers have previously paid for your company's losses, damages after lawsuits, the policy will always cost more for you.
  9. Number of employees board. The more emplyees are there, the more expensive the insurance is, as the risk of a professional or general liability lawsuit increases.

Even for the same company, insurance during different years of development the cost will considerably vary.

Take care of your peace

Any entrepreneur who knows that he or she calculated and hedged against risks as much as possible can have confidence in his or her company. It is better to find some free time in the beginning and research all possible offers and buy the necessary policies than to regret and pay damages later with the risk to your business.