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What is commercial insurance?
Also known as business insurance, commercial insurance helps protect businesses from losses due to unexpected events such as lawsuits, accidents, theft or even natural disasters. It’s usually made up of different types of insurance products, such as:
Liability insurance
- General liability: Protects you from lawsuits for bodily injury or property damage.
- Employers’ liability: Covers employee lawsuits for job-related injuries, including legal fees, damages, and settlements.
- Professional liability: Protects against lawsuits from customers or patients for perceived mistakes.
- Errors and omissions (E&O): Covers claims for negligence, malpractice, and errors.
Property and equipment insurance
- Commercial property: Protects physical property like equipment or inventory from fire, storms, or theft.
- Tools and equipment: Covers equipment and tools, especially when moved between locations.
Business operations insurance
- Business interruption: Compensates for lost revenue if your business is temporarily closed due to a covered peril.
- Business income coverage: Compensates for lost business income due to an insured peril, including payroll and operating expenses.
Employee and medical insurance
- Medical payments/workers compensation: Covers medical expenses and workers compensation for job-related injuries or illnesses.
Vehicle and transit insurance
- Commercial auto coverage: Covers employees driving company-owned or personal vehicles for business.
- Transit coverage: Protects goods or cargo during transportation.
Each product or need will depend on your specific business. In places like Ontario, businesses have to be registered in the province to be eligible for commercial insurance.
Who needs commercial insurance?
Commercial insurance is really for any business owner who wants to protect their business – whether you have a lot of staff, heavy machinery or large inventories of products. Commercial insurance can help keep your business humming even when accidents happen. Different industries have higher risk factors than others and may need more insurance.
Below are some of the recommended coverages based on industry type:
Property management
- Commercial property insurance: With this, offices, warehouses, and retail spaces are protected from perils like fire, theft, and natural disasters.
Construction and trade
- Contractor insurance: Protects contractors from property damage, injuries, and lawsuits that may occur due to construction or renovation work.
- Commercial auto insurance: Protects any business that uses vehicles to conduct their operations – whether it’s a pickup truck used by a general contractor, or a fleet of vehicles meant for transporting goods across warehouses or stores.
Online and freelance
- e-Commerce insurance: Protects online businesses (mainly online stores) from data breaches, cyberattacks, and product liability.
- Freelancer insurance: Protects independent professionals like writers, designers, and developers from allegations of professional negligence and similar incidents.
Personal and pet services
- Business insurance for personal services: Protects personal services businesses like barbers and massage therapists in the event of professional negligence, property damage, and other liability issues.
- Business insurance for pet services: Protects various pet services such as pet grooming and boarding services from liabilities involving animals as well as property damage and standard liabilities like slip-and-fall accidents.
Health and fitness
- Sport and fitness business insurance: Protects gyms and fitness instructors alike from risks like injuries, equipment and property damage, as well as liability claims.
- Business insurance for health and care: Designed for clinics, therapists, and other healthcare providers, this coverage provides protection from malpractice, liability, and property risks.
Events and entertainment
- Event and entertainment insurance: Protects event organizers and entertainers from cancellations, liabilities, and property damage.
Marketing and design
- Marketing and design business insurance: Protects marketers and agencies alike in case of intellectual property, professional liability, and legal dispute claims.
Retail and manufacturing
- Retail and manufacturing insurance: Protects retail and manufacturing businesses from product liability risks, inventory loss, and property damage.
Beauty and hospitality
- Business insurance for beauty salons: Provides protection from risks like injuries, professional errors, property damage, and product liability to beauty salons and spas.
- Hospitality insurance: Protects hospitality businesses like hotels and resorts from property damage, guest injuries, and business interruption.
General business
- General business insurance: Protects businesses across a variety of industries and specializations from risks like liability claims, property damage, and many others.
- Small business insurance: Helps small businesses ward off risks like liability claims (in all their iterations), property damage, business interruption, employee injury, and many others.
- Vendor insurance: Helps vendors of all kinds – whether they sell goods, services, or both – from property damage, liability claims, and product-related incidents.
- Professional and legal insurance: Protects professionals and businesses in the legal, consulting, and advisory fields from professional liability risks and client disputes.
- Consultant insurance: Protects consultants of all kinds from various liability risks, including professional negligence and mistakes.
Technology and security
- Technology insurance: Protects tech companies from data breaches as well as intellectual property and liability claims.
- Business insurance for security services: Helps security companies ward off risks like liability claims, property damage, and professional negligence.
Food and beverage
- Commercial insurance for food and beverage businesses: Meant for restaurants, coffee shops, and food manufacturers, this provides protection from food spoilage, liability claims, and property damage.
Common commercial insurance claims
Given how many businesses are out there, you can bet there is an even wider variety of insurance claims. Here are examples of the most common ones:
A slip-and-fall accident
An employee mops the floor inside your coffee shop. A customer comes in, slips on the wet floor and breaks their finger upon landing. They decide to seek legal action against you, which ends up costing you $18,000 in legal and medical expenses, plus the monetary judgement amount decided in the court.
Storm damage
A storm damages your warehouse, including the goods and equipment inside. As a result, your warehouse is no longer fully operational. Repair and replacement costs, plus lost revenue, amount to $74,000 in total.
Employee injury
An employee suffers severe burns in your restaurant, requiring medical attention. They decide to sue you for poor safety protocols and faulty equipment. Your legal fees, monetary judgement, plus the employee’s medical bills, end up costing you $32,000.
Tools and equipment malfunction
You run a construction company, and you’re building a second garage for your client. You leave your equipment overnight, but the site gets vandalized, leaving your equipment broken and unusable. This ends up costing you $12,000.
How much does commercial insurance cost?
The costs of commercial insurance will vary depending on the size of your business, the number of employees you may have and other factors that differ from business to business. A smaller business may several hundred dollars per year for their premium, while a bigger one may pay a few thousand, or a few tens of thousands, of dollars per year.
What are average rates for commercial insurance?
The cost of commercial insurance varies based on the type of business being insured. To find the cheapest commercial insurance for your needs, your best route is to speak with a broker that specializes in business insurance and has knowledge of the best commercial insurance companies. Brokers can help you compare commercial insurance policies.
How much commercial insurance coverage do I need?
As with any type of insurance coverage, the answer is, it depends. And with a commercial insurance policy, it really depends. That's because businesses vary a lot in terms of how much they're worth and how great the potential liability claims against them are.
First, split your business into its main parts. Then, figure out how much coverage each part needs. For example, calculate how much equipment, inventory, and other property your business owns, then decide how much liability coverage is necessary. This amount will vary. A small florist shop, for example, probably doesn't need as much coverage as a medium-sized manufacturing company does.
Just make sure your liability coverage is substantial. Many experts recommend at least $2-$5 million. Talk to a commercial insurance specialist to determine how much coverage your business needs.
How to get the cheapest commercial insurance quotes
It's easy — if you know how. Here are some of the best ways to lower your auto insurance premiums:
Shop around
Get quotes from multiple insurance providers to find the most competitive rate.
Implement safety measures
Insurers may offer lower rates if you have certain safety measures in place, like surveillance systems.
Choose the right coverage limits
Review your inventory and select coverage limits that match the actual quantity and value of your assets.
Opt for a basic policy
Choose a basic policy and add only essential coverage, avoiding extras to keep costs low.
Increase deductibles
Choose a higher deductible amount to keep your premiums low.
Ask for discounts
Ask about any available discounts, like having a claim-free history.
Review coverage regularly
As your business grows or changes, review your coverage to avoid paying a chunk on assets you no longer own.
Bundle up
Many insurers offer discounts when you buy several insurance policies instead of one. Ask about bundle deals.
Check with professional associations
Some associations (like the Canadian Federation of Independent Business) offer members discounted rates.
Avoid claims
Reserve insurance claims for big emergencies. If you remain claims-free long enough, your premiums will go down.
Regularly update your inventory
Review your inventory regularly to ensure you’re not paying for insurance on old or non-existent equipment.
Watch your credit score
A good personal credit score can help lower your premiums as you appear as less risk to insure.
Your questions about commercial insurance in Canada, answered.
Is commercial insurance mandatory for businesses in Canada?
No. Commercial insurance is not mandatory in Canada. But some partners or potential clients may require you to have valid business insurance before they do business with you. Also, the cost of not having commercial insurance could be very expensive if a disaster or injury occurs at your business.
Can I use commercial insurance coverages as my personal insurance as well?
Business and personal insurance are made to address different types of risks and losses. As their names suggest, personal insurance covers you specifically, and your personal assets. Business insurance is there to safeguard your business, and businesses tend to have more complex and varied needs than individuals.
Let’s look at commercial auto insurance versus personal auto insurance as an example. If you’re a contractor who uses their vehicle (e.g., a pickup truck) for both personal and business needs, then you will need both types of auto insurance. Personal auto insurance will not protect your business assets, such as equipment and tools, if they get damaged during an accident. Similarly, if you use your vehicle for personal needs, you may not get the required coverage under commercial auto insurance.
Who are the largest providers of commercial insurance in Canada?
According to the Insurance Bureau of Canada, the largest commercial insurance companies in Canada are:
- Intact Group
- Desjardins Group
- Aviva Group
- Co-operators Group
- Wawanesa Mutual Insurance Company
- Lloyds Underwriters CAB
- TD Insurance Group
- TSA Group
- Economical Group
- Northbridge Group
How do I compare commercial insurance quotes online?
To get your quotes, just click the 'Get Started' button above and fill out our short form. We'll connect you with the right commercial insurance provider and you can speak with an expert. Commercial insurance is complicated, and it's important to understand all the angles when it comes to protecting your business.
Why should I shop for commercial insurance online?
It always pays to shop around for insurance. Shopping online helps you zero in on the policy that fits your business and saves you money.
But, surprisingly, many small business owners don't realize that checking quotes online can result in big savings. Commercial insurance prices can vary widely from insurer to insurer, which is why comparing rates is the only way to get the best deal.
Luckily, no matter what kind of business you run, we can help you find the cheapest commercial insurance rates in your area.
Joel Kranc
About the Author
Joel Kranc is an award-winning writer, author and journalist. Most of his experience lies within the institutional investment and financial services space. He also covers a variety of business topics for publications in North America and the UK.