Owning a business can be an exciting way to provide useful goods and services to your community and create jobs. However, it’s hard work and an investment of your time, an investment of your money and your passion. It only makes sense to protect those investments from risk. Think about it, your livelihood and the livelihood of your employees could depend on it. When you think about the cost you pay for insurance, it starts to feel very small when compared to the stress of potentially having to start everything all over again. Successful businesses use a variety of tools to manage their risks. Business insurance is really just an umbrella term that refers to the whole bundle of insurance products that apply to a business.

Insurance contracts are very specific about what they cover so it makes sense to review your policy with an insurance professional to ensure your risks are covered.

Some of the most common types of business insurance include, but are not limited to:

• Commercial general liability insurance
• Product liability insurance
• Professional liability insurance
• Key person insurance (previously known as keyman insurance)

Commercial General Liability

Commercial General Liability coverage protects against two common liability claims:

• Bodily injury
• Property damage

Bodily injury to a third party is a common liability claim against business owners. It assumes that some sort of negligence took place for the injury to happen, but that doesn’t necessarily mean the negligence was the fault of the business owner. Sometimes, someone may be responsible for their own injury on your property and they could still file a liability lawsuit against you. These lawsuits are expensive and time-consuming and could find you financially responsible for costs associated with pain and suffering, medical bills, lost wages, and legal fees.

The property damage portion pays for damage to a customer’s property while on your business premises. If a customer’s car is dinged by a cart pusher, for instance, your liability insurance pays for the repairs. If you operate a landscaping business and the work you do leads to structural damage of a homeowner’s property, your general policy covers your damage obligations if a lawsuit is filed.

Product Liability Insurance

Product Liability Insurance is particularly important for businesses that provide a product rather than a service. Product liability refers to situations where an issue arises with a product and the source of the problem can be traced back to the business that sold the product. If your business is found responsible for an issue with one of the products you sell, you could find yourself with an expensive and time-consuming lawsuit. Your product liability insurance can help protect you from legal and medical costs that may come up in these instances.

Professional Liability Insurance

Professional Liability Insurance is also commonly known as Errors and Omissions Insurance, or when referring to medical professionals it’s known as Malpractice Insurance. This coverage helps safeguard a services business when clients claim they’ve suffered a financial loss due to service provided by your company. For example, let’s say you’re an interior designer and you’ve been hired by a dentist to design their new office. Unfortunately, you fail to meet the contracted deadline, which results in a delayed opening. You might face a lawsuit for the income lost due to the delayed. Professional liability insurance could help protect you with the costs associated with the lawsuit.

Key Person Insurance

Key Person Insurance protects against business risk in the event of unfortunate death of a valued member of your business. Usually taken out by companies for a person running the day to day operations. Imagine if the person who opens your store every morning was no longer there, or if the senior lawyer of your firm passed away. This coverage compensates the business for financial losses that would arise from the death or extended incapacity of an important member of the business.

People always ask “how much am I going to have to pay for business insurance?”That’s a great question and there are a number of things that the insurance companies will gather before giving a quote. You can either contact an insurance company directly or speak with an insurance broker who can shop the market on your behalf.

Sean Clouden
Cloud Wealth Management
info@cloudwealthmanagement.ca
www.cloudwealthmanagement.ca