Tips for Choosing the Best Small Business Insurance

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There are many ways you can save money on small business insurance, photo credit you-x-ventures on unsplash
There are many ways you can save money on small business insurance, photo credit you-x-ventures on unsplash

This is a sponsored post by Foxquilt.

So you’ve removed the shackles of your corporate job and have decided to take the plunge and start your own small business. Starting a small business comes with many risks, but the rewards can make it all worth it. You are probably focusing on implementing your business plan, getting your website online, hiring employees, branding, and marketing and locating a suitable office space. One of the last things you may be thinking about is small business insurance, but it’s just as important to focus on insurance as the other aspects of opening a small business.

Small business insurance is extremely important and even a necessity if you are employing others. You need to protect your business assets, employees’ health, and property. Read further to learn about tips for choosing the best small business insurance for your business.

There are many ways you can save money on small business insurance, photo credit you-x-ventures on unsplash
There are many ways you can save money on small business insurance, photo credit you-x-ventures on unsplash



Determine How Much Insurance You Need

You don’t want to waste money by being over-insured, but at the same time, you don’t want to bear the risk of being under-insured. Take the following steps:

  1. Make a list of all the things related to your small business that you will require insurance for against loss or lawsuit such as inventory, equipment, vehicle, business premises (owned or rented), employees and customers;
  2. If you are a small business working from home with no employees, you may be able to get an upgrade on your home insurance policy. If your business has assets stored at your business location including home-based businesses, you will likely need contents insurance. This is a separate insurance policy from your home contents insurance policy;
  3. If you have even one employee, you will likely have to register with the Workers’ Compensation Board and pay Workers’ Compensation Insurance premiums. This protects your employee(s) if they are injured on the job;
  4. If you plan to use your vehicle for business, you must advise your insurance company of this change since a standard auto insurance policy will not protect you or staff driving your vehicle in the event of an accident. Your insurance company or broker will sign you up for a commercial auto insurance policy.
  5. In order to provide coverage for accidents and losses, you should obtain Commercial General Liability insurance (CGL). CGL covers Bodily Injury and  Property Damage, Personal and Advertising Injury, Medical Payments, Tenants Legal Liability and in some cases can include Employers Liability and Non-Owned Automobile Liability coverages as well. For instance, a courier delivering a package to your business might slip on your walk or a skincare treatment you have provided to a client may have an adverse effect. All companies including home-based businesses should be carrying a CGL policy as it covers defense and damages against a lawsuit if your products or services cause bodily injury or property damage to others.
  6. Business Interruption or Business Income insurance is an extension of business property insurance that can cover profits, fixed costs including ordinary payroll and extra expenses when a business property claim arises to cover the profits a company would have earned had the loss not occurred. This can be extremely important coverage for businesses of any size, as extra expenses can mean a business may no longer be able to service its customers and meet contractual obligations. Without this coverage extension, your business may have to permanently close if a claim arises.
  7. Cyber Liability Insurance provides coverage for cyber incident response costs, cybercrime including social engineering, cyber sextortion, system interruption, network damage and privacy liability. Any business that stores private or sensitive information about employees or clients in digital or paper format should consider obtaining this type of insurance as cybercrime is increasing and standard policies do not cover these risks and liability.
  8. Errors and Omissions insurance or Professional Liability, Malpractice or Errors and Omissions Insurance protects your company against claims arising from failure to provide the expected service level or financial loss from wrongful acts that would not be covered under the commercial general liability insurance. Business, IT and medical professionals such as insurance brokers, freight forwarders, engineers, lawyers, architects, health care practitioners, developers, management consultants should consider obtaining this type of coverage. Errors and Omission Insurance can cover any employee of your company, at any level.
  9. Marine or Cargo insurance provides coverage against loss or damage caused to property while in transit. As the shipper, you may be legally responsible and even though you may think you can rely on carriers, buyers or sellers insurance policies for coverage, their policies often include limits and exclusions that may prevent the loss from being covered. Even if it is covered by one of their insurance policies, relying on that can easily ruin your reputation as these claims may take significant time and effort to handle – you may end up losing a customer in the process! Marine or Cargo insurance policies can be cost effective for a business of any size as they can be administered on a shipment to shipment basis.
  10. Umbrella and Excess liability insurance is a cost-effective tool to protect your business from the unexpected by increasing your coverage limits, in case your primary policy coverage limits are tapped out. It can also provide a drop-down effect in some cases when primary coverage is excluded or when the aggregate limit has been used up.



Save on Insurance Premiums

Here are several ways you can save on your insurance premiums:

  1. Ask your insurance company or broker if there are ways to reduce your small business insurance premiums. For example, you may receive a reduction in premiums for installing a security system at your small business;
  2. You may be eligible to receive a discount on your insurance policies if you have more than one type of insurance policy with the same insurance company;
  3. If you can afford to, increase the deductible on your small business insurance policies. This will lower the cost of annual premiums, although keep in mind that should you make a claim, you will have to pay a higher amount upfront.
  4. Another great way to save on insurance is by signing up with Canadian company, Foxquilt. This Canadian insurance tech company has built an online recommendation system for home, business and automobile insurance products. Foxquilt brings people together so that they can save on insurance through the power of group purchasing. Like-minded consumers and businesses are grouped together so they can save time and money researching and purchasing the most ideal home, business and auto insurance products. For example, if you are starting a new side business, you can join Foxquilt’s Side Hustlers’ group to enjoy the benefits of group purchasing power to save on high-quality insurance products. If you are a dog or cat owner, you can join Foxquilt’s Pet Lovers’ group. Foxquilt currently has over 100 groups and is continually adding new groups on a regular basis, it opens this unique opportunity to many Canadians who need insurance.
  5. When it’s time to renew your insurance, shop around for the most competitive insurance rates.
  6. Should you launch a new product line or hire additional employees, you should report these changes to your insurance broker/company to ensure you have adequate coverage.

business infographic Foxquilt

There are a lot of aspects to consider when choosing small business insurance. Hopefully these tips will help you optimize the insurance that is needed for your business.

You might also be interested in reading, “Getting a Mortgage if You Are Self Employed“.

19 COMMENTS

  1. Thank you for so many insightful tips! Love that you started off with risk vs reward, cause after all that’s what it all boils down to!

  2. Finding the perfect insurance can be arduous as they are many terms and tips to be aware of. Thanks for sharing your informative post.

  3. Business insurance is definitely important if you have lots of tangibles ad employees too. Do you need one if you just run a blog and have no costly physical assets? Depends.

  4. Wow so much useful information here for sure! Insurance choices can be so hard work, so always useful to read a breakdown like this x

  5. These are very insightful, detailed and, useful tips that anyone who wants to start a small business should know. A very informative post. Thanks for sharing this.

  6. When we did commercial maintenance we had to carry a million dollars in CGL coverage for one company that we did work for. After shopping around I was shocked at the varying costs of this type of coverage. You really need to do your homework when deciding.

    • I agree that there is so much to learn when starting a small business and half the time, you learn it after you have been in business for a few years! Cheers, Lori

  7. Yes, this is a great idea. I am currently working from home but still do not have insurance. Will definitely look into this together with my business permit renewal. Minimizing risk will bring us peace of mind.

    Thank you so much for sharing these tips. Very helpful.

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