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Commercial insurance in Ontario: the basics.

Businesses of all sizes need insurance, whether they operate in someone’s home or in giant factories. There are a multitude of risks that can occur, from customer complaints to third-party injuries. Commercial insurance plays an important part in an overarching business plan.

Commercial insurance comes in a variety of forms, and the coverages you choose depend on your industry and your company's exposure to risk. The most common types of commercial insurance cover things like property, liability, and workers’ compensation. 

We'll take you through the different types of commercial insurance available in Ontario and help you narrow down which coverages your business needs most. Luckily for business owners in Ontario, there are many insurance providers.  

Your questions about commercial insurance in Ontario, answered.

What does commercial insurance cover in Ontario?

In general terms, commercial insurance will cover property, liability and workers’ compensation issues. Property insurance generally covers damages to your business property; liability insurance covers damages to third parties, and workers’ compensation insurance covers on-the-job injuries to employees.

There are other reasons, however, for taking out commercial insurance:

Regulatory obligations: There are some instances where regulatory requirements dictate what kind of commercial insurance you need. You are responsible for ensuring that your products and services are safe and your employees work in a healthy, safe environment.

Most employees, employers and workplaces in Ontario are covered by occupational health and safety regulations. As an employer in Ontario, your obligations include a duty to instruct, inform and supervise your workers in order to protect their health and safety.

Many Ontario contractors must have certain types of commercial insurance before they are even allowed to open for business. In this case, commercial insurance protects both the customer and the employer.

Contractual obligations: In many cases, businesses will not sign a contract with your company unless there are guarantees or assurances that payment will still occur if your business cannot fulfill its obligations. Some companies will purchase what are called “surety bonds” — a type of insurance that protects your customers or suppliers against losses if you don’t meet obligations.

Equipment type: While most commercial insurance will cover buildings and contents, it may not always cover you for equipment breakdown. Equipment breakdown insurance, a subset of commercial insurance, can typically help protect your equipment from damage caused by external sources such as fire, some forms of water damage and losses related to weather.

Similarly, if you operate a transport business, you are legally required to have commercial auto insurance (or for your personal vehicle if it is used in the business).

What type of commercial insurance do I need in Ontario?

Commercial insurance comes in many shapes and sizes for a variety of businesses and professions. The following list describes the different types and what they might be used for

Business interruption insurance is a type of insurance that covers the loss of income that a business suffers after a disaster. The income loss covered may be due to disaster-related closing of the business facility or due to the rebuilding process after a disaster.

Commercial general liability insurance protects you and your business against claims for bodily or personal injuries, advertising liability, as well as property damage to third parties that come from your operations, or products, or incidents that may occur on your business premises.

Product liability insurance protects against claims of personal injury or property damage caused by products sold or supplied through your business.

Professional liability insurance (also known as errors and omissions insurance) protects your business from claims of negligence related to a professional service.

Cyber risk coverage is designed to help an organization mitigate risk exposure after a cyber-related security breach or similar event.

Equipment breakdown insurance covers equipment damages caused by things such, such as power surges, electrical shorts, mechanical breakdowns, motor burnout or operator error.

Commercial property insurance covers buildings and contents even if you lease a property in cases of fire and theft, for example.

Commercial auto insurance protects the business against third-party claims that arise out of auto accidents.

What type of commercial insurance is popular in Ontario?

As of last year, Statistics Canada listed Ontario as the province with the highest number of active businesses, nationally employing 471,846 people. That number reflects an extremely diverse economy that makes up about 37% of Canada’s GDP, according to the Government of Ontario.

Many of the industries making up Ontario’s economy include manufacturing, agriculture, forestry, high-tech, financial services, mining, chemical and biochemical companies, automotive, life sciences and many more.

Each of these industries plays an important part in the economy but they each have different insurance needs. Let’s take a closer look at the manufacturing, auto, and mining sectors. Each of these industries rely on heavy equipment and machinery to produce their respective products. Therefore, it would make sense that they would take on equipment breakdown insurance to protect their revenue.

The financial service industry is a broad category and may include lawyers, accountants, consultants, and others. Given their close ties to clients, as it relates to services, they may be more inclined to take out professional liability insurance.

Life sciences, given that they may produce medicine or medical devices may want to have product liability insurance, for example.


How much does commercial insurance in Ontario cost?

There is no one-size-fits-all answer as to how much commercial insurance coverage costs in Ontario. The first thing any business should do before making a purchase is to compare rates and get quotes from providers. LowestRates.ca can help. Our free service helps people save time and money by allowing them to compare insurance rates and receive quotes in minutes.