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Liability Insurance for Your Small or Home-based Business

Small businesses with fewer than 50 employees contribute 30% of Canada’s GDP nationwide. Maybe you won’t start the next Toronto Dominion Bank or Imperial Oil out of your garage or home office, but it’s clear that the Canadian entrepreneurial spirit is alive and well.

Properly protecting your growing small business or home-based business comes with some special considerations. In particular, business liability is a risk often overlooked by startups with big dreams.

Business insurance comes in several forms, but most home-based businesses or small businesses need to focus on a core set of risks initially.

What is general liability insurance?
General liability insurance protects your small business against common types of claims, keeping you protected if you’re found to be legally liable for injuries to others or property damage caused by your product, by accidents on your premises, or by your actions or the actions of employees at your customer’s location. Inadvertent mistakes on your part, such as errors or omissions, are handled by a separate type of liability insurance policy.

Be aware that in most cases your home business activities, including injuries sustained by clients or business visitors, are not covered by your homeowner’s insurance or tenants insurance policy. Your for-profit venture can cost you in more ways than you realize if you’re not properly insured for common risks.

What is errors and omissions coverage?
Errors and omissions coverage, also known as E&O coverage or professional liability insurance, was originally designed for doctors, lawyers, engineers, and other similar occupations in which an error or oversight can cause financial harm to the client. The application for errors and omissions coverage has expanded to reach nearly every service related field. If your small business or home-based business works as an advisor or in a consultative role with clients, errors and omissions coverage can help protect your small business against claims due to human error.

Reach out to your broker to discuss your insurance needs for your small business. Rates are often more affordable for small businesses because there’s less exposure than with larger businesses — allowing you to grow your coverage as your business grows.

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