As a business owner, you need to be aware of the many different types of insurance available to protect your business, your staff, your family and your income. Insurance needs vary tremendously based on the nature of the business and how many people work for you. Canadians are considered by many observers to be underinsured and unprepared for a personal financial crisis, and this goes for small businesses too.
The answer is "it depends". It really depends on your business activities and the type of insurance. Insurance for small businesses covers a vast array of needs. Some of which are personal and discretionary, such as life insurance to protect your family. In some cases, insurance will be required and mandatory, either by contract or by law. Many large corporations require suppliers to have insurance for professional errors and omissions. In other cases, your landlord may require proof of insurance when you sign a lease. Finally, you may also be required by law to have insurance coverage. As an example, you operate a school bus service. The best approach is to discuss your business and personal situation with an insurance broker. More on that below.
Let's look at some of the most common types of coverage available to business owners:
There's no one-size-fits-all approach. Your personal situation and business activities will determine your needs. Life and business insurance advisors and brokers can help you figure out the coverage and insurance amounts you need.
Business insurance is available through commercial insurance brokers. For information and advice, go to the Insurance Bureau of Canada. Group health plans are offered directly by insurance companies or through group benefits brokers.
Here are a few scenarios and recommendations for insurance coverage for different types of small businesses:
Most salaried employees have group health insurance and basic life and disability insurance. As a small business owner, you may have none of the above. But What happens if you stop working because of illness or disability, and you have no insurance protection to replace income and maintain your business? The financial impact could be devastating for your family, and the company might have to cease operations. Every business owner should have personal life, disability, critical illness and health insurance coverage (unless they are covered under their spouse's plan) if their business has no group health insurance. Having health insurance in place is critical, especially if you have children at home, or if your partner does not have any income or health insurance through work. Ask friends and family to recommend a few insurance advisors you can contact for advice on coverage and cost estimates.