When you first started your company, perhaps you didn’t see any real value in small business insurance. You may have reasoned, “We only help a few customers,” or, “The cost of business insurance isn’t worth it.”
Then, as your business grew, you became so busy taking care of your customers that you didn’t have the time to think about insurance. Even now, you may feel that your business has no serious risks that merit the costs of commercial insurance.
Does this sound familiar? Are you wondering why small businesses need insurance in the first place?
Keep reading as we shed light on this important topic — and what it means for your business.
Why Small Businesses Need Insurance
No matter what kind of company you run, the reality is that every type of business carries some kind of liability. Even if you run a very small office with only a few employees, there are still inherent risks associated with running your business.
Here are some of the most common risks that businesses face:
- Personal injury (i.e., a slip and fall incident on your business premises)
- Professional liability (i.e., a recommendation or service that results in loss/harm to your client)
- Cyber liability (i.e., a security breach that compromises your customers’ personal information)
- Auto liability (i.e., an employee crashes while driving a company vehicle)
Of course, some of these risks have always existed, while others are modern problems requiring modern solutions.
Take, for example, the ease of doing business online. Over the past two years, as global markets were impacted by COVID-19 restrictions, more businesses shifted from traditional brick-and-mortar storefronts to digital operations. This involves a whole new way of doing business, including online ordering, curbside pickup, or even booking simple appointments.
This digital shift can do wonders for your company’s growth, but it also exposes you to a whole new set of potential threats. If your sensitive data is breached by a cyberattack or by an error made in storing it, do you have the right kind of coverage? Did you know that cyber liability (and an entire holistic liability approach) are likely a lot more affordable than you thought?
The Benefits of Insurance for a Small Business
Coverage from a cybersecurity breach is just one example of why small businesses need insurance. Here are some other factors you may not have considered before:
- Insurance coverage may be required by law in your city/province
- Insurance is often mandatory for business contracts
- Business insurance protects both your employees and your customers
- Proper coverage builds trust and credibility in your brand
- Insurance protects your company from costly lawsuits and natural disasters
- Business insurance allows you to offer better benefits and retain your best employees
Of course, not every business needs every type of insurance coverage. Our approach is to put together a profile of our clients’ businesses and advocate for them through our network of over 30 insurance companies to find the best solutions.
We work with thousands of businesses across Canada in a range of all industries. This helps us to make sound recommendations on coverage, pricing, and risk management practices to better improve your workflow and viability.
Case Study: The Value of Small Business Insurance
To illustrate the value of insurance for a small business, consider a real-life example.
In 2019, we helped to set up a small commercial liability package for an auto financing company in the Greater Toronto Area. Our client employed 14 staff members and was expanding to a new location.
When our client received his lease agreement, the landlord required him to have his own liability insurance. This was a mandatory part of the lease agreement to mitigate risk for the landlord. At the time, our client was unaware that he had any exposure to risk, as he hadn’t heard of any lawsuits or claims with his peers in the industry.
We took the opportunity to educate him by presenting solutions for liability. This included office contents coverage and loss of income should a fire, flood, or other covered loss physically damage his business location. Together, we set up a policy for $800/year that extended his coverage beyond the basic legal liability required by his lease agreement.
Sure enough, within the first year of the policy term, a fire broke out at the client’s place of business. We were able to claim coverage for his office contents, including computer hardware, loss of income during the shutdown, and repair costs.
This policy provided our client with peace of mind for all related damages. A simple liability policy (like the one required in his lease agreement) would have left him high and dry following the fire, without being able to generate income during the shutdown.
Considering our client’s current revenue and last year’s revenue, the forensic accounts from our provider were able to correlate the future loss of income and compensate him. Additionally, we could quickly and easily replace the $30,000 worth of computers because they were covered under the policy.
Obviously, no one ever expects an event like this to happen to them. As insurance brokers, we see the value of these offerings as we get to know our clients and go through the claims process.
What’s the takeaway, then? For only $66/month, we were able to protect our client, his business, and its employees!
Learn More From a Qualified Insurance Broker
Now that you understand why small businesses need insurance, what comes next?
Have you considered your company’s current exposure to risk and liability? Is it time to update your commercial insurance policy or finally sign up for coverage? Remember, having a great financial plan is a key step in the future health of your business!
The world will continue to evolve and the global market will continue to shift, so the time to prepare is now. We encourage you to contact us today to have an objective, no-obligation chat about the insurance options we can provide for your business.
With over 10 years of experience, we’re here to make the process as easy and affordable as possible. Use our online form to request a free quote or email us at: email@example.com.
Or, if you prefer to speak with someone, call us anytime at 647-966-7093.
James Inwood is a member of Canadian Insurance Brokers Inc. CIBI operates across Canada with more than 40 licensed brokers and is completely independent so our advice is always objective. Representing 14 insurance carriers on the personal side and over 20 insurance providers on the commercial side helps give my clients clear choice and competitive pricing.