How Much Small Business Insurance Do I Need?
Aug 28, 2020
How much business insurance do you need for your small business?
One of the most common mistakes small business owners make with their insurance is not getting the right amount of business insurance coverage. You knew that you needed small business insurance but now you're thinking that you didn't know there was a right or wrong amount of it! First of all, you're already taking a step in the right direction because business insurance matters for companies of all sizes. We break down the further steps you should take to fully understand how much insurance is necessary for your small business.
Not every business is the same and you may require specific coverages for your needs; under insuring and not having the right coverage after a crisis is an obvious nightmare. But over insuring and getting every coverage available is a mistake too; having specific needs for your business also means some coverages just won't apply to you. Think of it this way: Would a shoe store need insurance for cooking equipment? Being over insured means losing valuable money over something you didn't need at all - another obvious nightmare.
Here are some tips to help you decide how much business insurance is enough and what business insurance do you need:
How to Get Small Business Insurance Coverage in Canada:
A Mini Guide to Small Business Commercial Insurance in Canada
There are several strategies to use while searching for commercial insurance.
-Take an inventory of your business' risks: Create a list of potential losses or liabilities. This includes any property (including your house if you run your business out of your home), vehicles, equipment, or supplies that are vital to your business. Don't forget risks like a data breach or death of a key employee.
-Separate the personal from the commercial: This is especially important if you're still small and using your car or home for business purposes. Your personal policy won't cover you if there are damages due to commercial activities.
-Explore premium reduction strategies: Ask your broker what you can do to lower your premiums. Don't cut corners by excluding a policy you need. Instead, ask about discounts for purchasing multiple policies from the same provider or consider steps you can take to reduce your risk profile.
-Find a broker who understands your industry: Not all brokers are alike. A restaurant has different needs from a laundromat, and you want a broker who has experience selecting the right policy for businesses like yours.
What insurance coverages do I need for my small business?
If you're still wondering where to start with your business insurance or which coverages you need for your small business, Commercial General Liability, Cyber Insurance or Professional Liability Insurance(E&O) can be good places to start.
What is Commercial General Liability Insurance (CGL)?
Commercial General Liability Insurance or CGL can protect your business from Bodily, Property or Advertising injury; for example, if your product or service harms someone or their property. It can cover legal fees, medical costs or payment for damages. All businesses, including home-based and small businesses, should be carrying a Commercial General Liability policy; it acts as the basis in protecting your business from liability.
What is Cyber Liability Insurance?
Like Commercial General Liability, Cyber Liability Insurance is increasingly becoming an insurance coverage that all businesses, including small businesses, should carry because of our dependence on technology. Cyber Liability can provide coverage to cover the cost of a response team if you do suffer a cyber attack - as well as the cost of damages and liabilities. Cyber attacks and breaches include phishing, malware, ransomware, spoofing and denial of service attacks; these attacks have been on the rise for businesses. You may assume that hacks and breaches only occur to large businesses or tech related businesses; however, small businesses are often targeted instead because they likely have less security than large, tech businesses and can be more easily infiltrated. All small businesses should consider Cyber Liability Insurance if they use digital tools - even email - or if they store personal data of employees and customers online.
What is Professional Liability Insurance?
Professional Liability Insurance or E&O insurance protects your small business from claims or lawsuits arising from negligence, misconduct, product failure or failure to deliver the expected level of service.
How much liability coverage do I need for my small business?
Often, small businesses purchase liability insurance with a $1 million limit. It is best to speak with a broker or insurance professional to look at your specific small business and its needs to fully understand if more is needed.
The best thing you could do is consult a broker; they're the insurance professional and know exactly what you'll need to stay protected. At Foxquilt, we're more than happy to listen to your situation, help you get the right amount of business insurance coverage and explain your policy to you. When you join Foxquilt, you're not just a customer to us; you're a part of our community. We'll be there for you whether you just have a question or when you need us most during a claim.
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