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It might be your full time gig or a side hustle, but Canadian’s are entrepreneurs and small business owners. Statistics Canada reports that small- and medium-sized businesses are significant contributors to the Canadian economy.  Making insurance for entrepreneurs an important part of the economy.

For context, small businesses made up 98.1% of all employer businesses in Canada in 2021, employing 9.7 million individuals in Canada – about two-thirds of the total labour force.

According to Benson Honig, Professor, Human Resources and Management, DeGroote School of Business, McMaster University, tells Knowledge Labs, “Canada is very robust market full of a new whole generation of potential entrepreneurs that are keen to make a difference in the world. And entrepreneurs will become an even more important part of the Canadian economy.”

The type of insurance for entrepreneurs is varied depending on the type of business and industry you provide goods or service. Let Reliance Insurance break down the options to help mitigate your risk.

First things first – Commercial General Liability 101

If you provide a service or a product, this is the place to start to investigate if you need insurance for entrepreneurs.  It is recommended to have this insurance policy if you:

  • You have an office space or clients visit you at home.
  • You visit your client’s office space or home.
  • You have staff who conduct business off-site

The world is a changed place and litigation is on the rise. This policy will cover you for the following if you are sued for:

  • Bodily injury, personal injury
  • Medical expenses – Provides coverage for medical expenses if someone is injured on your premises or by your products
  • Property damage as a result of business operations
  • Occupiers and operations liability
  • Products liability
  • Advertising injury (damage from slander or false advertising)
  • Defence costs legal expenses for liability claims brought against your business, regardless of who is at fault
  • CGL policies safeguard against a broad range of liabilities also provide coverage for the cost to defend and settle claims. However, CGL policies have exclusions you need to be aware of that may need other insurance coverages.

    5 most common exclusions found in a CGL policy

Work performed exclusion

  1. Co-employee bodily injury coverage
  2. Work performed exclusion
  3. Product Itself exclusion
  4. Contractual liability exclusion
  5. Care, custody and control exclusion

Individuals and businesses are able to purchase a variety of different insurance policies – such as Umbrella or Cargo and stock throughput Insurance – that would cover any gaps from a care, custody, or control (CCC) exclusion. Have a consultation with your broker to help identity the gaps.

Cyber Insurance

No business is small enough to escape the eyes of the bots and real-life hackers.
Cyber threats are becoming more invasive and it is only a matter of time that a small business will be a victim of phishing, malware, ransomware, denial of service, insider threats or other malicious actors trying to remotely penetrate your systems.

As more businesses adopt texting to communicate with customers, also on the rise is “smishing”, the nefarious practice of cybercriminals using a spoofing techniques to make text messages appear as though they’ve come from a trusted source. The goal is to extract personal information or access codes.

The only way to not fall prey is have an air-tight policy regarding your digital security. There are many resources to help achieve this including a free active risk assessment from Coalition Insurance.

  • Cyber Insurance summary of possible coverages
  • Cyber response expense
  • Computer attack
  • Breach of personal data
  • Business interruption
  • Hacker damage
  • Cyber extortion
  • Third-party coverage
  • Network security liability
  • Ransom demand negotiations

Shaun Booth, Account Manager at Reliance Insurance reports, “Cyber threats have grown considerably in recent years from the amount of daily attacks, to the increase in ransom demands. Recent surveys from our underwriters indicate that cyber attacks on small business is up 40%. Some sobering statistics released by Security.org indicate that social attacks increased 197% from 2019 to 2020 and denial of service was up 49%. That puts small business in Canada in a very high risk category.”

Other insurance policies to consider by industry

Depending on your industry and trade you may want to look at some of the following insurance endorsement coverages or special coverages:

Manufacturing

Are you starting a food or beverage business? Cookies, cakes, power drinks or the next best thing – you may want to consider coverages for:

  1. Product liability
  2. Business interruption
  3. Product recall; contamination

Construction & Trades

Are you a general contractor, or a one man show providing trade services to other companies. Depending on how you run your business you may need liability and or property insurance If you are in the following industries:

  • Builders
  • Cabinet makers
  • Concrete
  • Drilling, demolition, earthworks & excavations
  • Electricians, plumbers, gas fitters, welding
  • Fencing, landscaping
  • HVAC
  • Painters
  • Pipeline
  • Power-Line Inspection
  • Equipment mechanics
  • Roofing, scaffolders
  1. Non-owned auto
  2. Builders risk and wrap up
  3. Contractual liability insurance
  4. Non-owned auto

Professional Services

Professional liability insurance, also known as errors and omissions or malpractice insurance, is intended for people or businesses that offer professional services. This is a form of business insurance designed to help professional advice, consulting and service-providing individuals and companies protect themselves against a negligence claim made by a client in a civil lawsuit for allegedly giving wrong advice, error in service, or incorrect data/information to clients.

insurance for entrepreneurs
Are you thinking of starting a new business? Many categories of small business needs to consider insurance for entrepreneurs. Even if you are a sole proprietor, a partnership or a limited entity.  Consider your field, the type of work you perform and what insurance makes the most sense for you exposures.

  • Architects
  • Arbitrators and mediators
  • Beauty and spa service providers
  • Bookkeepers
  • Business associations
  • Consultants
  • Data processors
  • Educational institutions
  • Engineers
  • Executive search firms
  • High tech firms
  • Management firms
  • Non-profit organizations
  • Software developers
  • Travel agents

Your business offering is unique and will require a risk assessment to ensure you have enough coverage. There are several other coverages specific to the needs of professional service entrepreneurs and businesses

      1. Errors & omissions
      2. Directors & officers
      3. Umbrella insurance

    We know being an entrepreneur comes with many facets of responsibility and financial commitments. Our goal is to help you find the right balance of insurance, at the premium you can afford, for the risk exposures you have. You don’t need to be over insured. Ask us how.

    Resources
    Futurepreneur
    Statistics Canada: Cyber security risks
    Statistics Canada: Digital Economy & Soceity 

    Photo Credits:
    Photo by Ian Schneider  & Photo by Lidia Vi on Unsplash

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