Navigating Small Business Insurance in Canada: A Guide for Entrepreneurs

Small businesses are the backbone of the Canadian economy. In fact, a whopping 98% of companies in the country are classified as “small”—comprising 1.19 million of Canada’s 1.21 employer businesses.

Considering the importance of small businesses, it’s vital that entrepreneurs in Canada insure their businesses against financial loss, liabilities, worker’s compensation, and other risks. 

However, for Canadian entrepreneurs and small business owners, navigating the world of business insurance can be as complex as it is crucial. Understanding the nuances of various insurance policies is vital in safeguarding your business against unforeseen events.

Let’s look at the best small business insurance options for Canadian business owners, while cutting through the noise to offer the best general guidance on this important topic.  

The Importance of Small Business Insurance

In a survey conducted by Deloitte, it was revealed that about 25% of small business owners do not have any form of business insurance in Canada. It’s even worse among our southern neighbours, where 44% of business owners forego insurance. 

Yet, the reality is that any small business can face legal actions, property damage, or other liabilities that can financially cripple operations. Insurance serves as a protective shield, offering peace of mind and financial security in the event of disaster or unforeseen damages. 

Although it isn’t mandatory, provincial governments in Canada highly recommend business insurance. 

It’s easy to see why. 

Imagine, for instance, that a customer slips and falls on your property. If uninsured, the resulting lawsuit could cost you hundreds of thousands in damages and tens of thousands in legal fees. However, a small business with a $2,000-per-year general liability insurance policy would be spared these expenses. Most insurance policies have a $2 million coverage limit or more.

In short, small business insurance is a necessary lifeline for many Canadian entrepreneurs. Without it, most business owners wouldn’t be able to keep their company afloat during financial or legal crises. 

Key Types of Insurance for Small Businesses

For most Canadian entrepreneurs, general liability insurance (or “commercial liability insurance”) is the go-to option for protecting their business. However, there are several other options available to business owners should they choose for more specialized coverage: 

1. General Liability Insurance: Protects against claims of bodily injury, property damage, and advertising injury. It’s essential for all businesses, especially those interacting with clients or the public.
2. Professional Liability Insurance: Also known as Errors and Omissions (E&O) insurance, it covers claims against businesses that provide professional and personal services, ideal for consultants, accountants, and lawyers.
3. Property Insurance: Covers damage to business property and assets, including equipment, inventory, and furniture from fire, theft, or natural disasters.
4. Business Interruption Insurance: Provides compensation for lost income and fixed expenses if your business operation is halted due to a covered loss like fire or flood.
5. Cyber Liability Insurance: Important for businesses handling sensitive data, it protects against data breaches and cyber-attacks.
6. Workers’ Compensation Insurance:  Mandatory in most provinces, it covers medical costs and lost wages for employees injured at work.

Factors Influencing Insurance Costs

The cost of insurance varies based on factors like business size, industry, location, and the types of coverage needed. 

For instance, a tech startup might pay between $1,000 and $3,000 annually for general liability insurance, while a small retail business could pay around $500 to $2,000.

Note: Costs displayed are in USD (Source: Forbes Advisor)

The types of activities that your business undertakes will have an outsized influence on the costs associated with insuring the business. For example, construction companies have higher risks of accidents and workplace injuries than consulting firms. Therefore, insuring a construction company will come at a steeper price. 

Other factors that influence the cost of small business insurance are the following:

• Type of Coverage: The specific insurance policies a business needs will significantly impact costs. Common types of coverage include general liability, property insurance, workers’ compensation, professional liability, and commercial auto insurance.
• Industry and Business Size: Different industries have varying levels of risk, and insurance costs can reflect these differences. Larger businesses often pay more for insurance due to their increased exposure to risk.
• Location: The location of the business can impact insurance costs. Areas prone to natural disasters, high crime rates, or litigation-heavy environments may lead to higher premiums.
• Claims History: A business’s claims history can affect insurance costs. Frequent or large claims can lead to higher premiums, as insurers view the business as a higher risk.
• Annual Revenue and Payroll: The size of a business, as measured by its annual revenue and the number of employees, can impact insurance costs. Larger businesses typically pay more for coverage.
• Coverage Limits and Deductibles: The limits of coverage and deductibles chosen by the business can affect costs. Higher coverage limits and lower deductibles generally result in higher premiums.

Small business owners should work closely with insurance professionals to assess their specific needs and risk profile, choose appropriate coverage, and find ways to manage costs effectively. Maintaining a good risk management strategy can also help businesses reduce insurance expenses over time.

Finding the Right Insurance Provider

Choosing the right insurance provider is as important as the insurance itself. Look for providers with experience in your industry, transparent pricing, and positive customer reviews. Resources like the Canadian Federation of Independent Business (CFIB) can offer guidance.

Alternatively, you could contact one of our vetted and top-ranked Canadian small business insurance companies below. These companies are trusted by thousands of Canadian entrepreneurs due to their financial stability, reputation, claims handling process, diversity of coverage options, and their customer service track record.

7 Best Small Business Insurance Companies in Canada

Below are our seven top-rated insurance companies that specialize in insuring small businesses in Canada in consideration of diverse rating factors including affordability and coverage quality. 

1. Intact Insurance

• Location: Headquartered in Toronto, Ontario.
• Founded: 1809
• Pros: Known for its broad coverage options, including general liability, customizable policies, and a strong presence across Canada.
• Get a Quote

2. Aviva Canada

• Location: Based in Markham, Ontario.
• Founded: 1696
• Pros: Offers flexible coverage options, competitive pricing, and a range of business insurance products.
• Get a Quote

3. The Co-operators

• Location: Headquartered in Guelph, Ontario.
• Founded: 1945
• Pros: Known for its cooperative business model, personalized service, and a focus on supporting local communities.
• Get a Quote

4. Desjardins General Insurance (DGIG)

• Location: Based in Montreal, Quebec.
• Founded: 1944
• Pros: Offers comprehensive insurance solutions, including general liability, and is known for its financial stability.
• Get a Quote

5. Northbridge Insurance

• Location: Headquartered in Toronto, Ontario.
• Founded: 1920
• Pros: Specializes in commercial insurance, including general liability, and provides risk management and loss prevention services.
• Get a Quote

6. Economical Insurance

• Location: Based in Waterloo, Ontario.
• Founded: 1871
• Pros: Offers a range of business insurance products, customizable coverage, and competitive pricing.
• Get a Quote

7. Travelers Canada

• Location: Headquartered in Toronto, Ontario.
• Founded: 1864
• Pros: Provides tailored solutions for small businesses, risk management tools, and extensive industry expertise.
• Get a Quote

Note that the availability of these insurers and their offerings may vary depending on your location and specific business needs. Make sure to request quotes and compare policies from multiple insurers to find the best coverage and rates for your small business in Canada. 

Best Practices for Small Business Insurance

The best practices for finding the best small business insurance are fairly self-evident, but they bear mentioning:

• Assess Your Risks: Understand the specific risks associated with your business type.
• Shop Around: Get quotes from multiple providers to compare coverage and costs.
• Read the Fine Print: Understand what’s included and excluded in your policy.
• Review Annually: Your insurance needs may change as your business grows.

Don’t Let Small Business Insurance Be An Afterthought

Insurance is not just a regulatory requirement; it’s a strategic business decision. In today’s unpredictable business environment, having the right insurance coverage can mean the difference between a temporary setback and a catastrophic loss. 

Canadian small business owners must take proactive steps to understand and invest in appropriate insurance coverage, ensuring their business’s longevity and stability. Consider contacting one of the trusted Canadian small business insurers listed above to protect your business today. 

But liability insurance isn’t the only thing you need to protect and grow your business. Don’t forget to invest in your business’s future with a sound and forward-looking marketing strategy. To gain a competitive advantage, consider an SEO marketing strategy or content marketing strategy today.