Tips to consider when insuring your business as a newcomer to Canada

3 minute read  

Canada is built on small businesses and a large portion of new Canadian businesses are started by immigrants. According to an Immigrant Entrepreneurs Research Program study 11.9 per cent of immigrants aged 25 to 69 either owned a private incorporated company or were primarily self-employed.

When considering running a business as a newcomer to Canada, it’s important to first understand if you’re legally allowed to own and operate a business in Canada, if the business activity is regulated in Canada, and if it requires a license or certification. The Government of Canada offers plenty of resources to help get a business off the ground.

It’s also important to get the right insurance — and there isn’t a one-size-fits-all solution. An accident, natural disaster, or cyberattack could cause a major loss and even bankruptcy. Don’t leave it until the last minute and miss out on protection!

Getting started with business insurance

“It’s important to understand what you need from a coverage perspective. That means doing your research and exploring your options,” says Michael Hill, executive underwriter at TruShield Insurance, which offers small business insurance coverage for retailers, service providers, consultants, and contractors across Canada.

Finding the right insurance partner early on is so important.  Your particular operations could present specific insurance hurdles.

“If your plan is to sell into the U.S., you should first confirm that insurance coverage will be available for the products and/or services that you are offering,” says Hill. “Because the U.S. market can be quite litigious, in some cases, securing insurance coverage could be quite difficult, and might require a business plan adjustment.”

Be sure to research the options available to you to help you find the right insurance solution for your business. If you leave it until the last minute, you may discover that your business, or certain aspects of your business, are not insurable. Give yourself enough time to secure the best available insurance coverage and pricing, and the time to adjust your new business plans should any changes be required.

What kind of insurance do you need?

Commercial general liability insurance:

Commercial general liability insurance (or CGL insurance) is a good place to start for most businesses. CGL insurance is designed to respond to situations where your products or services are responsible for causing a third party to suffer a bodily injury or property damage.

Professional liability insurance:

For those businesses that provide professional services (e.g. management consultants, human resource consultants, IT consultants, etc.), professional liability insurance — also known as errors and omissions insurance — would be a wise addition.  Errors & Omissions insurance coverage is designed to respond to situations where the professional services you provided are responsible for causing a third party to suffer a financial loss.

Commercial property insurance:

Commercial property insurance provides protection for property you own, that’s located at your business premises. Having commercial property insurance can help to protect you against loss or damage resulting from things like natural disasters, fire, theft, or vandalism. Mobile tools and equipment that you use off site away from your business premises, would require separate insurance coverage under a contractor’s equipment form.

Business interruption insurance:

Another important consideration is business interruption insurance. If you were to suffer an insured loss, such as a fire, would you be able to continue operating your business without support? Business interruption insurance can help to replace your loss of business income while property damage repairs are being completed.

Cyber Insurance:

For most businesses, cyber insurance is an extremely important coverage. Small businesses are often targeted by cyber-attacks because they may not have the resources to properly protect themselves — and cyber-attacks can be costly. In 2021, 41 per cent of small businesses that suffered a cyberattack said it cost them at least $100,000, according to a survey conducted for the Insurance Bureau of Canada.

Commercial vs personal Insurance:

Commercial and personal insurance policies are very different from one another. A personal policy will usually not extend to cover business operations. For example, if you’re using a vehicle for business purposes it needs to be insured on a commercial auto policy.

“We see a lot of home-based businesses, and in most cases, a homeowner’s policy doesn’t provide any coverage for business operations,” says Hill.

Next steps

New business owners may believe that small business insurance is unaffordable, however, this couldn’t be further from the truth.

Do your research, talk to multiple brokers, obtain quotes, and discuss deductibles, exclusions, and liability limits. Give yourself enough time to secure the best available insurance coverage and pricing, and the time to adjust your business plans should any adjustments or changes be required.

Even after making your purchase, be sure to schedule regular reviews with your insurance provider. As your business grows, so will your revenue, supplies and inventory. All of these changes could affect the insurance coverage you need.

“Don’t forget about your policy after you purchase it. Continue having discussions with your provider and keep your policy up to date” says Hill.

To learn more about business insurance and how it can help protect your new small business, visit our business insurance landing page today!