Getting started with small business insurance

We hear the question often, “how much does small business insurance cost?” Unfortunately, there is no standard answer. 

That’s because businesses vary as much as the people who own them, and the premium you pay is based on many factors, like what you sell and if you have a storefront.

Some owners don’t consider small business insurance a necessity, but the fact is that even if you don’t have inventory or a retail location, your company still has financial and legal risk.

“Liability is the greatest risk for home-based businesses. If you operate a sole proprietorship or small business from your home, be aware of, manage and mitigate your business risks.”

Insurance Bureau of Canada 

But that’s why you’re here—to learn how to secure small business insurance for your company. So let’s get started.

Step 1: Learn the different types of business insurance

Different business risks call for different kinds of business insurance, but we know that, as a business owner, you don’t have a lot of spare time to go searching for all of it.

Research is often the first step in making any type of purchase, and it’s especially important with small business insurance. There are many different types of risks associated with different businesses, and you need to know which ones apply to you.

Professional liability insurance

Also known as errors and omissions insurance, professional liability insurance covers financial losses due to errors or negligence. In practice, that could look like a customer injury in your workplace, or even just missing a marketing deadline that cost a client tens of thousands of dollars in lost sales.

Commercial general liability insurance

These types of plans work similarly to professional liability insurance, but with a subtle difference: they protect the company as an entity rather than the sole proprietor running it. 

Product liability insurance

Product liability insurance covers the cost of a lawsuit against you or your company on the grounds of a faulty product. If the product caused damage of some kind, then you could face legal action. This keeps you covered.

Cyber risk and data breach insurance

Even brick-and-mortar businesses tend to have strong digital infrastructures these days, making the chance of a data breach an ever-present risk. Plans for cyber risk cover you for the cost of such a breach.

Commercial property insurance

Commercial property insurance can cover a wide range of risks, making it essential for any small business with a physical location. In addition to covering damage to the building itself, you can choose to add coverage for rent guarantee, tenant insurance, and equipment kept on the property used for your business.

Commercial auto insurance

Not every business needs commercial auto insurance, but many do: contractors, couriers, and consultants or coaches that do on-site work may need to use a vehicle for business purposes. Covering the cost of accidents goes a long way toward keeping your cash flow stable.

Business interruption insurance

This plan covers financial losses when your business can’t operate due to sudden and unforeseen circumstances. A common example might be a windstorm breaking the window in your store front (like the one Waterloo experienced back in 2018), which would make the inside unfit for business.

Crime insurance

Unfortunately, people can do bad things to a business. Theft, forgery, fraud are all possibilities. Putting a plan in place to cover your business from this kind of risk keeps your business in good shape even if it becomes targeted by less-than-reputable people out there.

Directors and officers insurance

Big decisions have big impacts, and some of them may invite allegations of wrongful acts. Purchasing insurance for directors and officers covers your business against the legal cost of litigation toward your officers and board of directors.

Workplace Safety Insurance Board

Some jobs are more dangerous than others, which can lead to injury on the job. Worker’s compensation insurance replaces a portion of wages and medical coverage for employees who suffer injuries on the job and can no longer work. 

Group insurance

These types of plans can provide employees as well as their families with coverage for health, dental, and life insurance. Depending on the size of your company you may also be eligible to provide employees with exclusive discounts on car and home insurance, too.

You may also see a small business insurance option called business owner’s package (BOP). This includes more comprehensive coverage for a wider variety of risks, such as rolling professional liability, commercial property, and cyber risk insurance into a single plan. Look into the details of the policy to be sure it’s the coverage your business needs, or speak to your aha insurance representative to help you decide. 

Step 2: Determine what type of coverage your business needs

Now that you know the types of insurance you can secure, you need to determine what coverage your specific business needs.

  • Are you a fancy doughnut shop with a storefront and expensive equipment?
  • A plumbing company with a fleet of trucks, expensive tools, and employees?
  • Or are you a copywriter working from your home office?

Ask yourself these questions:

  • What does your business do?
  • Do you work with your hands to build, install, or fix things?
  • Do you provide consulting services?
  • Do you sell products in a store?
  • Do you sell products online?
  • What type of products do you sell?
  • Do you manufacture products?
  • Do you need to travel to deliver your products or services?
  • Do you need commercial vehicles to operate your business?
  • Do you have employees? How many?
  • Do you handle or maintain records of sensitive client information?

You’ll probably find that your business needs don’t require every kind of coverage, but that you’ll still need more than just one kind of coverage. That’s why we offer business owner packages.

Step 3: Figure out how your business manages risk

Some business classes just face more chances for something to go wrong than others, but it’s always possible to put processes in place to mitigate accidents. Consider the following:

  • Is your business located in a relatively safe area?
  • Do employees have all the protective measures in place to work safely?
  • Could products have more safety measures built in?
  • Are processes in place to mitigate mistakes that could cause physical or financial harm?
  • Does the company rely on a single employee for a critical process?

Making an effort to manage processes, people, and products goes a long way toward protecting the business from potential harm.

Step 4: Calculate your business’ assets

Part of insuring any business is understanding the value of its assets. Similarly to how home insurance hinges on the cost to rebuild a given home, the amount of coverage for your small business hinges (in part) on the value of its assets.

  • Owned property and its market price.
  • Company vehicles (personal vehicles don’t count).
  • Digital assets.
  • Product inventory.
  • Tools.
  • Office furniture.

If you’re having trouble with this step, your insurance representative can always give you a hand. 

Step 5: Collect necessary documents and information

Now that you know what kind of insurance is right for your business and the coverage you’ll need, it’s time for the paperwork. You’ll need to present certain documents depending on the type of small business insurance you’re getting.

It’s best to speak to your insurance representative about the specific documents they need, as every policy and provider is different, but here is a list of what they could potentially ask for:

  • Business address (and addresses of all branches)
  • Age of office building (if applicable)
  • Number of employees
  • Total payroll
  • Gross sales for the previous year
  • List of business assets
  • List of tools, equipment, and office furniture
  • Business bank account and credit information
  • Proof of company vehicle ownership 
  • Company vehicle make, model, and identification number
  • Driver’s license of anyone driving the company vehicles
  • Health and safety policy documents
  • Professional certificates (e.g. forklift licenses or tax accountant certifications)
  • Existing insurance policies (if you’re switching providers)

If you are securing health insurance or employee liability insurance for your staff, you may also need to provide additional information, such as:

  • Names
  • Addresses
  • Dependents
  • Birth date
  • Social security numbers 

Step 6: Speak with a small business insurance broker

Now it’s time to put everything together and secure your small business insurance. An insurance brokerage like our team members at aha insurance will review your information and give a final recommendation on how much coverage you should secure.

This step is especially important because your broker will catch any details that are unique to your scenario, like a type of insurance add-on that your company might need, even if it isn’t standard.

Once you’ve accepted the recommended coverage, your provider will create your small business insurance policy. Peace of mind and financial security can be that simple.

We hear the question often, “how much does small business insurance cost?” Unfortunately, there is no standard answer. 

That’s because businesses vary as much as the people who own them, and the premium you pay is based on many factors, like what you sell and if you have a storefront.

Some owners don’t consider small business insurance a necessity, but the fact is that even if you don’t have inventory or a retail location, your company still has financial and legal risk.

“Liability is the greatest risk for home-based businesses. If you operate a sole proprietorship or small business from your home, be aware of, manage and mitigate your business risks.”

Insurance Bureau of Canada 

But that’s why you’re here—to learn how to secure small business insurance for your company. So let’s get started.

Step 1: Learn the different types of business insurance

Different business risks call for different kinds of business insurance, but we know that, as a business owner, you don’t have a lot of spare time to go searching for all of it.

Research is often the first step in making any type of purchase, and it’s especially important with small business insurance. There are many different types of risks associated with different businesses, and you need to know which ones apply to you.

Professional liability insurance

Also known as errors and omissions insurance, professional liability insurance covers financial losses due to errors or negligence. In practice, that could look like a customer injury in your workplace, or even just missing a marketing deadline that cost a client tens of thousands of dollars in lost sales.

Commercial general liability insurance

These types of plans work similarly to professional liability insurance, but with a subtle difference: they protect the company as an entity rather than the sole proprietor running it. 

Product liability insurance

Product liability insurance covers the cost of a lawsuit against you or your company on the grounds of a faulty product. If the product caused damage of some kind, then you could face legal action. This keeps you covered.

Cyber risk and data breach insurance

Even brick-and-mortar businesses tend to have strong digital infrastructures these days, making the chance of a data breach an ever-present risk. Plans for cyber risk cover you for the cost of such a breach.

Commercial property insurance

Commercial property insurance can cover a wide range of risks, making it essential for any small business with a physical location. In addition to covering damage to the building itself, you can choose to add coverage for rent guarantee, tenant insurance, and equipment kept on the property used for your business.

Commercial auto insurance

Not every business needs commercial auto insurance, but many do: contractors, couriers, and consultants or coaches that do on-site work may need to use a vehicle for business purposes. Covering the cost of accidents goes a long way toward keeping your cash flow stable.

Business interruption insurance

This plan covers financial losses when your business can’t operate due to sudden and unforeseen circumstances. A common example might be a windstorm breaking the window in your store front (like the one Waterloo experienced back in 2018), which would make the inside unfit for business. 

Crime insurance

Unfortunately, people can do bad things to a business. Theft, forgery, fraud are all possibilities. Putting a plan in place to cover your business from this kind of risk keeps your business in good shape even if it becomes targeted by less-than-reputable people out there.

Directors and officers insurance

Big decisions have big impacts, and some of them may invite allegations of wrongful acts. Purchasing insurance for directors and officers covers your business against the legal cost of litigation toward your officers and board of directors.

Workplace Safety Insurance Board

Some jobs are more dangerous than others, which can lead to injury on the job. Worker’s compensation insurance replaces a portion of wages and medical coverage for employees who suffer injuries on the job and can no longer work. 

Group insurance

These types of plans can provide employees as well as their families with coverage for health, dental, and life insurance. Depending on the size of your company you may also be eligible to provide employees with exclusive discounts on car and home insurance, too.

You may also see a small business insurance option called business owner’s package (BOP). This includes more comprehensive coverage for a wider variety of risks, such as rolling professional liability, commercial property, and cyber risk insurance into a single plan. Look into the details of the policy to be sure it’s the coverage your business needs, or speak to your aha insurance representative to help you decide. 

Step 2: Determine what type of coverage your business needs

Now that you know the types of insurance you can secure, you need to determine what coverage your specific business needs.

  • Are you a fancy doughnut shop with a storefront and expensive equipment?
  • A plumbing company with a fleet of trucks, expensive tools, and employees?
  • Or are you a copywriter working from your home office?

Ask yourself these questions:

  • What does your business do?
  • Do you work with your hands to build, install, or fix things?
  • Do you provide consulting services?
  • Do you sell products in a store?
  • Do you sell products online?
  • What type of products do you sell?
  • Do you manufacture products?
  • Do you need to travel to deliver your products or services?
  • Do you need commercial vehicles to operate your business?
  • Do you have employees? How many?
  • Do you handle or maintain records of sensitive client information?

You’ll probably find that your business needs don’t require every kind of coverage, but that you’ll still need more than just one kind of coverage. That’s why we offer business owner packages.

Step 3: Figure out how your business manages risk

Some business classes just face more chances for something to go wrong than others, but it’s always possible to put processes in place to mitigate accidents. Consider the following:

  • Is your business located in a relatively safe area?
  • Do employees have all the protective measures in place to work safely?
  • Could products have more safety measures built in?
  • Are processes in place to mitigate mistakes that could cause physical or financial harm?
  • Does the company rely on a single employee for a critical process?

Making an effort to manage processes, people, and products goes a long way toward protecting the business from potential harm.

Step 4: Calculate your business’ assets

Part of insuring any business is understanding the value of its assets. Similarly to how home insurance hinges on the cost to rebuild a given home, the amount of coverage for your small business hinges (in part) on the value of its assets.

  • Owned property and its market price.
  • Company vehicles (personal vehicles don’t count).
  • Digital assets.
  • Product inventory.
  • Tools.
  • Office furniture.

If you’re having trouble with this step, your insurance representative can always give you a hand. 

Step 5: Collect necessary documents and information

Now that you know what kind of insurance is right for your business and the coverage you’ll need, it’s time for the paperwork. You’ll need to present certain documents depending on the type of small business insurance you’re getting.

It’s best to speak to your insurance representative about the specific documents they need, as every policy and provider is different, but here is a list of what they could potentially ask for:

  • Business address (and addresses of all branches)
  • Age of office building (if applicable)
  • Number of employees
  • Total payroll
  • Gross sales for the previous year
  • List of business assets
  • List of tools, equipment, and office furniture
  • Business bank account and credit information
  • Proof of company vehicle ownership 
  • Company vehicle make, model, and identification number
  • Driver’s license of anyone driving the company vehicles
  • Health and safety policy documents
  • Professional certificates (e.g. forklift licenses or tax accountant certifications)
  • Existing insurance policies (if you’re switching providers)

If you are securing health insurance or employee liability insurance for your staff, you may also need to provide additional information, such as:

  • Names
  • Addresses
  • Dependents
  • Birth date
  • Social security numbers 

Step 6: Speak with a small business insurance broker

Now it’s time to put everything together and secure your small business insurance. An insurance brokerage like our team members at aha insurance will review your information and give a final recommendation on how much coverage you should secure.

This step is especially important because your broker will catch any details that are unique to your scenario, like a type of insurance add-on that your company might need, even if it isn’t standard.

Once you’ve accepted the recommended coverage, your provider will create your small business insurance policy. Peace of mind and financial security can be that simple.

Seriously, what else can you do in 3 minutes?

Boil half an egg?

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