What is business insurance and why might I need it?

Managing a business involves anticipating risks. Business insurance that’s tailored to your business needs could safeguard your operations, shield your assets and limit your liability if you’re covered. In this guide, you’ll learn how to understand insurance policies so you can enjoy peace of mind while you focus on what matters most: your success.

Business insurance tailored to your industry could be the best way to protect your operations, cover your assets and limit your liability, no matter what size your company is. The right business insurance helps cover financial losses from accidents or claims, though it may not entirely prevent downtime or operational delays when a major incident hits.

Unlike personal insurance (auto and home insurance), business insurance focuses on risks that are related to your professional activities (damage to premises, third-party claims, equipment breakdown, etc.). You can also get coverage to protect against things like cyber risks and water damage, or industry-specific coverage, such as general liability and professional liability.

A standard commercial insurance policy could help absorb the costs of property damage (fire, vandalism), third-party liability, income loss during repairs, incidents involving commercial vehicles and professional errors and omissions (E&O).

Business insurance could be useful if:

• You’ve signed a commercial lease.

• You use a vehicle for commercial purposes.  

• You’re a professional in a regulated field (for example, an optometrist or optician).

There are several types of business insurance coverage, including: 

• General liability insurance

• Commercial property insurance 

• Business interruption insurance

• Commercial auto insurance

• Professional liability insurance, also known as errors and omissions (E&O)

• Cyber risk insurance 

Purchasing business insurance can help small and medium enterprises (SMEs) mitigate the risk of unexpected events, meet contractual requirements and help keep operations running smoothly, even in the face of a claim or lawsuit. 

Without protection, you and your business could be vulnerable. Keep in mind that a fire, water leak or dissatisfied client can lead to unforeseen expenses, which could rapidly deplete your cash reserves.

Many commercial leases and service agreements require proof of insurance to protect all parties involved. And in the event of damages, insurance can help cover lost revenue and repair costs, allowing you to resume operations with minimal downtime.

The risk of loss events for businesses is growing given the global climate situation. According to the Insurance Bureau of Canada, floods, wildfires and other natural disasters have generated nearly CAN$8.5 billion in insured claims in recent years. Added to this are cyberattacks (phishing, ransomware, data breaches), theft, equipment breakdowns and water damage.

Beyond peace of mind, the right insurance not only reassures your partners, but can be a prerequisite for obtaining financing.

There are various types of business insurance, and requirements differ based on where in the country your company operates. While business insurance may feel like an additional cost—especially when budgets are tight—it can become increasingly valuable as your business grows.

One specific type, professional liability insurance, is required for some professionals such as physicians, lawyers, accountants and architects. Requirements vary based on your province and your profession, so be sure to check with your professional association.

A business insurance policy is essentially a contract with five key elements. Being able to understand each one helps prevent unwelcome surprises when you file a claim.

1. Declarations: This section contains information about your company (operations, head count, locations). The information must be accurate.

2. Insuring agreements (conditions): This section spells out exactly what your insurer will cover and under what circumstances.

3. Exclusions: These are the scenarios that aren’t covered, such as intentional damage or certain natural disasters.

4. Coverage limits: This is the maximum amount your insurer could be required to pay for a covered loss.

5. Deductible: This is the portion of each claim you agree to pay out of pocket.

When purchasing (or renewing) your business insurance, take some time to consider what you need. Asking the right questions is a good first step. Here are examples of questions you might ask.

1. Risk exposure

• What type of incidents (fire, water damage, equipment theft) could disrupt your operations?

• Do you use vehicles for your commercial activities?

• Do clients visit you at your premises or do you sell exclusively online?

Example: A home-based consultant may need commercial liability and property insurance coverage to protect visitors and the home office equipment used for the business.

2. Workforce size and employee risks

• How many employees do you have?

Example: A startup with three people on staff may not need the same coverage in terms of employers’ liability as a company with 100 employees.

3. Asset value and replacement costs

• What is the total value of your commercial property (equipment, inventory)?

What would it cost to rebuild your premises from the ground up?

Example: A construction business has $30,000 in inventory and a repair workshop valued at $100,000. It may need to adjust its insurance limits to cover both the inventory, the specialized equipment and reconstruction costs.

Once you’ve decided which coverage you want, it’s time to start researching providers and getting quotes. And take your time! It’s a big decision.

Your goal is to find the coverage that fits your needs. To do so, it’s important to take the time to carefully review the different insurance packages available and determine which one is most suited to your business. It’s a good idea to: 

1. Gather your key information: This includes number of employees, business activity, annual revenue, past claims, etc.

2. Compare the plans: Compare policy limits, exclusions, inclusions, deductibles, optional coverages and more.

3. Ask questions: To ensure you’ve selected the best coverage for your needs, don’t hesitate to reach out to one of our certified agents for personalized guidance.

Once your policy is in force, keep a physical and/or digital copy and make sure they’re easily accessible. You should also review your policy every year or after any major change (new employee, relocation, new equipment, updated facilities or expansion of your commercial vehicle fleet) to reassess your coverage and update your insurance.

By tailoring your insurance coverage to your actual business needs, you’ll help ensure you’re protected while only paying for what you truly require.

1. Learn more about the coverages that could meet your business needs.

2. Compare what’s available, request multiple quotes and take advantage of available discounts.

3. Regularly review your policies and be sure to inform your insurer of any changes.

Legal Notes:

Desjardins Insurance refers to Desjardins General Insurance Inc. in Quebec and Certas Direct Insurance Company, underwriter of automobile and property insurance.

Business insurance products are only available in Quebec, Ontario, Alberta and New Brunswick.

Certain conditions, exclusions and limitations may apply.

The terms and conditions relating to the coverage described are specified in the insurance contract, which prevails at all times.

This guide is provided for information purposes only. It is general in nature, and Desjardins Insurance cannot be held liable. It is recommended to consult an insurance agent for comprehensive and tailored advice.

Desjardins®, Desjardins Insurance®, all trademarks containing the word Desjardins as well as related logos are trademarks of the Fédération des caisses Desjardins du Québec, used under licence.