What Insurance Does a Business Need by Law in Ontario?

You have worked hard to account for every possible disruption in your business. Protecting your enterprise is essential to your employees as well. Almost 98% of all companies in Canada are small businesses and account for 8.2 million jobs.

Yet, as diligent as you are, some circumstances can still present dangers to your business. If you have a new business, you may not know the facts about business insurance requirements. Liability insurance in Ontario might seem a bit confusing.

But if you wonder what insurance does a business need by law, keep reading. This guide will explain small business general liability insurance and why it’s essential for you.

What Is Liability Insurance in Ontario?

Accidents can happen at any time in the course of operating your business. In many instances, your business is at risk of harm from sources beyond your control. Liability insurance in Ontario can protect your enterprise from suffering a financial injury.

Several aspects of a business can get protection from an unfortunate loss. Depending on the type of industry, you can get coverage for loss of equipment or property. A liability and property insurance policy can also protect you in the event of a natural disaster.

Yet, liability insurance is of value to you in the event of a lawsuit. The policy can also offset the cost of injury to employees or visitors to your company. In a broad sense, liability insurance provides relief from claims by a third party.

What Insurance Does A Business Need By Law?

In Ontario, the law requires you to carry at least general liability insurance. Ontario general liability insurance requirements generally get set by governing bodies. Landlords, banks, or lenders can also set guidelines. The amount of coverage you will need depends on your exposure to risk. Different policies exist for varying industries, but all begin with basic liability.

Most small business general liability insurance begins at a $1 million policy. Yet, no matter how small the business, planning protects you from the unexpected. General liability is most common and protects your business against legal action. But if you use a vehicle for business, it’s crucial to get the policy rated for commercial use.

One other type of liability insurance that may be required by law in Ontario is Workplace Safety and Insurance Board (WSIB) insurance. Employee salaries determine the cost of their coverage. The policy reflects the amount you will need to pay an employee who loses work due to injury while working.

What Types of Small Business Insurance Are There?

Your insurance needs will depend on several factors about the business. Small business in Canada defines a wide range of industries. Each industry gets exposed to specific outside forces.

Generally, your business will fit into one of the following types of liability insurance. Yet, an insurance broker can create a custom policy if your business overlaps.

General Liability Insurance

This basic liability policy will cover you in case of incidents on your property. Most cases include accidental damage or personal injury suffered on the premises.

This policy is also known as a standard commercial insurance policy. You can get liability coverage for the premises alone. Or increase the coverage based on the global exposure to your business.

Product Liability Insurance

There are circumstances where this could get covered under standard liability coverage. This extra coverage type protects manufacturers against damages caused by your product.

The policy refers to negligence from defects in products. The protection generally covers loss from personal injury to the product user.

Professional Liability Insurance

If a customer suffers financial loss due to an error made by your company, this policy covers any damages.

For example, your client may have lost business due to your product or service error from a third party.

Content Insurance

If you own a store or warehouse with inventory, this kind of insurance is crucial for your protection.

Items of value can get damaged by various elements like water or fire. Theft of property is also a significant part of this type of coverage.

Cyber Liability Insurance

Protection against hackers and data theft is an increasing threat to many businesses.

This insurance protects you from legal action caused by breaches in cyber security. If you have a business website, this liability insurance is a vital tool.

Tenant Liability Insurance

Many small businesses do not own the property where they operate. The coverage protects the business owner against damages to the property.

Operators that lease or rent service shops like auto repair will need this type of policy.

There are, of course, other coverages not included in these types of policies. Every business is different, so talk to a broker to get the best small business insurance in Ontario.

Home Based and Travel Insurance

Many business owners use their homes to operate today. This extra commercial insurance helps in cases where typical home coverage won’t.

Most home insurance policies will not cover liability related to business activities. They will also exclude the property coverage as a business. It’s best to talk with a broker about adding coverage for a home-based business.

If your business involves travelling, this type of insurance is a must. Depending on the structure, the policy can cover you in case of trip delays. Also, the policy can include cover for loss or damage of materials while travelling.

What Is the Cost of Liability Insurance in Ontario?

Much like auto insurance, your cost to insure will include several factors. Insurance coverage is dependent on location and years of operation. Prices will vary if you operate in an urban centre or have years of unclaimed coverage.

The policy will also depend on how much staff you employ and the business’s income. Policy costs will also depend on the type of business you run. Some industries need massive inventories to work efficiently.

Other companies might be more labour intensive, so the requirements will change. Every facet of your business gets consideration when building a liability insurance policy.

Other Benefits From Liability Insurance in Ontario

Recent times have proved we never know what the future holds. The pandemic put many small businesses at risk, and many failed. While insurance can’t cover everything life throws at us, it has benefits beyond the obvious.

With the best small business insurance Canada offers, you can get peace of mind if plans go awry. Depending on your unique liability insurance requirements, you can stay in business while you’re not there. If you need medical leave for an extended period, liability insurance can help.

As a responsible employer, your small business general insurance will also protect employees. Team members that feel safe in their work environment are more productive. The goodwill of insuring against possible injury to staff tells them you care for them.

Yet, small business insurance can also benefit your bottom line. Many types of service businesses rely on reputation to attract customers. Clients are more likely to do business when they know they have protection. Carrying appropriate insurance becomes a selling feature for your business.

Of course, mistakes happen in the course of doing business. Even the most innocent error can generate a lawsuit. Besides legal issues, the most unpredictable events of all are natural disasters.

Any event out of your control can create losses that you can never recoup. So preparing before with the best small business insurance in Ontario is critical.

How To Get The Best Small Business Insurance In Ontario

First, it’s essential to know that no two commercial insurance policies are alike. Your road to the best small business insurance in Canada begins with planning. Start by going over the risks inherent in your type of business.

Often, a business will be at risk from different insurance coverage categories. A home business operator may still use a vehicle to perform services. Other companies may need coverage against property loss and personal injury.

Be mindful to remove your personal insurance needs from your business. There is no need to double up on car insurance if you already have personal coverage. James Inwood can guide you with the types of documents you will need to set up your policy.

There is no better resource for learning about types of insurance than from a trusted broker. 

James will look for ways to reduce your premiums without giving up essential coverage. Again, every business has a unique set of needs to have protection.

Protect Your Business With Liability Insurance In Ontario

You worked long and hard to build a business that is one of your greatest assets. Ontario is an excellent place to have a thriving business. But now you know what insurance does a business need by law and how to find the best policy for you.

The next step is finding a professional who takes a personal approach to protect your business. The obvious answer is to look at someone with a track record in your community.

If you have been looking for that partner, you have already found them by reading this guide. Feel free to call us today and book an in-person appointment.

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.

James Inwood, Insurance Broker
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