5 must-have insurance coverages for small businesses in Canada

A commercial or business insurance policy is designed to shield business owners from the financial fallout of unexpected events. It’s the backbone of your business’s continuity and risk management plan.

Think of insurance as your business’s armour, protecting your company from unforeseen hazards—including unexpected damage, accidents and lawsuits—that threaten to disrupt your operations and upend your finances. 

A comprehensive, customized policy combines several types of coverage to help keep your doors open, your assets secure and your financial well-being intact, even in the face of significant setbacks. 

Here are five types of coverages every business owner should consider:

1. Coverage for injuries to customers or damages to their properties

One of the biggest risks businesses face is customer injuries. For instance, if a customer trips and falls and is injured on your business property or is hurt elsewhere because of your operations, you may be liable for their medical and rehabilitation expenses.

Likewise, while working at a customer’s home—such as a contractor doing repairs and renovations—you could be sued for accidental damage.

Another example: if a product you sell to a customer injures them or damages their property, you can also be liable for those damages.

General liability insurance is a type of coverage that covers injuries to customers or others as well as accidental damages to a customer’s property. It typically includes product liability insurance, which protects you from claims and lawsuits if a product you manufacture, distribute or sell (including food) harms a customer or their property.

2. Coverage for mistakes or allegations of professional negligence

If you provide advice and services to your customers—such as a consultant, an accountant or a freelance designer does—and you make a mistake, fail to provide a service as promised, or give poor advice that causes a customer financial or physical harm, you could be in big trouble.

A customer could make an allegation of professional negligence or misconduct against you, sue you for damages and seek compensation. Defending yourself in a lawsuit—even a frivolous one—can potentially cost tens of thousands of dollars, plus the cost of any out-of-court settlement or judgment against your business.

Professional liability insurance provides financial protection against these types of claims and lawsuits.

3. Coverage for damages to your business property

Your business property—be it a store, office, home-based business or other structure—could be damaged by fire, water, a natural disaster, theft or vandalism. Paying to repair or replace damaged property, the contents in it, and your inventory can easily run into thousands of dollars.

Commercial property insurance covers these types of perils to help your business recover quickly. Furthermore, many commercial property policies include a sub-coverage known as business interruption insurance. It kicks in following an insurable loss (such as fire damage) to cover your lost income and overhead expenses while your business is temporarily closed for repairs.

4. Coverage for damages to business vehicles

It’s well known that operating a vehicle in Canada without auto insurance is illegal. But if you have a business vehicle or use your car or truck for business purposes, did you know a private-passenger auto insurance policy may not cover you if you’re involved in an accident? Many private car insurance policies don’t cover vehicles used for commercial reasons, or the liability coverage limits may be insufficient if you’re in a collision.

Commercial auto insurance covers vehicles used for commercial purposes—any vehicle or trailer used to transport people, packaged goods, raw materials or hauling equipment. One of the most significant benefits that commercial auto insurance provides over personal car insurance is a higher coverage limit to pay for damages.

5. Coverage for data breaches and cyber-attacks

Small businesses are big targets for cybercrime. According to a 2024 Insurance Bureau of Canada (IBC) survey, only 31% of small and medium-sized businesses prioritize cybersecurity, and 73% have reduced their spending in this area compared to 2023. That leaves many companies exposed. For instance, a 2021 IBC report found that 41% of small businesses hit by cyber-attacks faced costs exceeding $100,000.

Every business should invest in two essential types of cyber insurance: cyber liability insurance and cybercrime insurance.

• Cyber liability insurance manages the fallout after an attack, covering costs related to legal responsibilities, data breaches, customer lawsuits and regulatory fines. 
• Cybercrime insurance offers proactive financial protection, stepping in to help prevent and cover losses due to online criminal activities. It covers financial losses due to schemes designed to trick employees into sharing sensitive information or transferring funds to fraudsters, for example.

These five types of coverage are vital, but your business may require others, as well, to build a comprehensive business insurance policy.

How to get comprehensive, low-cost business insurance quickly

Zensurance.com is Canada’s leading small business insurance brokerage, serving tens of thousands of small businesses, entrepreneurs and independent professionals across hundreds of industries to get the customized protection they need quickly and easily.

With over 50 insurers in our partner network, our knowledgeable team of licenced brokers can find the right policy to cover your liability risks, tailor it to suit your business and budget, and issue your policy documents and a certificate of insurance.

To get a free business insurance quote in less than five minutes, fill out an online application on the Zensurance website.

More about self-employment:

• Side hustles and self-employment in Canada: Taxes, business expenses and more
• How income from digital platforms is taxed in Canada
• Do I need a GST or HST number?
• Self-employed with no pension

About Brandon Bowie

Brandon Bowie is a team lead and senior broker, professional lines, at Zensurance.com.

Website