As a small business owner, you wear many hats—entrepreneur, manager, visionary. That’s a lot to be getting on with. Plus, running a small business involves risks, uncertainties, and unexpected challenges; in other words, even more things to keep you up at night.

That’s where insurance comes in.

Small business insurance is a critical safeguard for entrepreneurs. It provides financial security, legal support, and risk mitigation. Whether you run a cozy coffee shop or a tech startup, having the right insurance ensures that you won’t face crippling costs due to property damage, liability claims, or unforeseen disasters. Without the right insurance coverage, these expenses could be devastating for your business.

When setting up your venture, prioritizing comprehensive insurance is important to protect your company and gain peace of mind. But navigating insurance can feel overwhelming. Why is small business insurance essential? How can you decipher the maze of policies?

To help you better understand the process, WeBC has asked Melanie Zikatano and her team at BCAA to compile answers to the top questions that keep small business owners up at night. Buckle up as we demystify the complexities and empower you to protect your business effectively.

1. What is small business insurance?
2. Why is small business insurance important?
3. What are the main kinds of insurance coverage for small businesses?
4. What should you look for in an insurance provider, and what should you make sure is included in your policy?
5. What is Commercial General Liability and what does it cover? What does it NOT cover?
6. I need to provide proof of insurance to my lender. What kind of theft or fire insurance do I need?
7. I’m doing leasehold improvements in my office. What kind of insurance do I need to have during construction?
8. I recently incorporated my business. Do I need to change my insurance policy?
9. I run my business out of my home. Do I still need small business insurance or does my home policy cover me?

*Please note: The material in this blog is provided for general informational purposes only and does not, and is not intended to, constitute legal or insurance advice.

Common Questions About Small Business Insurance 

1. What is small business insurance?

Purchasing a small business insurance policy is a preventative measure that can be done to ensure a business and its associated operations are protected during unforeseen circumstances. Small business insurance can protect a business owner in scenarios where damage is caused to others, theft and damage is caused to a business or income is lost due to an insured incident.

Each business may require different types and amounts of coverage based on its industry, size, location and specific risks. It is recommended for small business owners to consult with an insurance professional to determine the appropriate coverage for their unique needs. However, although there are multiple providers that offer small business insurance, the type of product that they offer may vary. With BCAA Small Business Insurance, business owners can customize their policy with 30+ coverage options so they can feel confident that they’re protected.

2. Why is small business insurance important?

Although insurance may not be mandatory for running a business, having a policy in place allows you to operate with peace of mind so you can focus on managing and growing your business without constant worry about potential financial setbacks. A small business can face a lot of risks and volatility, especially in the early years, so having insurance can often be an integral part of a company’s long-term success. The annual cost of a premium is often minimal compared to the potential expenses of a lawsuit.

From a customer’s or investor’s viewpoint, having an active insurance policy also creates the perception of credibility since it shows that risks will be mitigated. This could be the deciding factor on why a customer may choose your business over a competitor’s.

3. What are the main kinds of insurance coverage for small businesses?

Included in every BCAA Small Business Insurance policy is Commercial General Liability Coverage. This coverage helps cover the cost of medical bills, legal expenses, lost income or repairs if someone injures themselves at your location, or you cause damage to someone else’s property. However, since every business is unique, the type of additional coverage required will vary.

If you operate your business out of a fixed location, Property Insurance may be important to ensure you have coverage for replacement or repair of your building, upgrades and contents in unfortunate circumstances such as fire, water damage or theft.

If you have equipment in transit or stored at a site that could get stolen or damaged, the Off Premises Coverage/Floater will help with replacement or repair.

Unfortunate circumstances, such as fires, can occur. If one closes your shop for an extended period you’ll be thankful if you have Business Interruption Insurance to ensure you can get back on your feet by covering the income you’d typically be receiving while you work on reopening your business.

These are just a few examples of how small business insurance can play an important part of your daily business operations in a variety of different scenarios.

4. What should you look for in an insurance provider and/or what should you make sure is included in your policy?

Your insurance provider should be someone you trust and you know will be available when you need them. That’s why BCAA Small Business Insurance has a 24/7 Claims Team and Advisors available to help answer any questions you have about your business or your policy. Each policy will vary in the types of coverage included, but it is important that you have sufficient limits in place to protect you in event of a claim.

Here are a few tips to ensure you’re protecting yourself and getting the most out of your policy:

• Take pictures of your receipts and store them on your hard drive or in the cloud. If an insured incident occurs, such as theft or fire,  your items could be stolen or damaged beyond recognition, but you can very easily prepare your claim without overlooking details if you have photos on hand.
• If you want coverage for lost profits in case your business shuts down, talk to your accountant and show them your insurance policy so they can be aware of what you are covered for. It will be much easier for them to work with your insurance provider when a settlement is being calculated.
• Take a picture of your workspace that shows your business equipment, tools, supplies, etc. That way you can easily see what you had if there is a claim where a lot of items are stolen/damaged.

5. What is Commercial General Liability and what does it cover? What does it NOT cover?

Commercial General Liability (CGL) is included in every BCAA Small Business Insurance policy. This coverage helps cover the cost of medical bills, lost income or repairs if someone injures themselves at your location, or you cause damage to someone else’s property. However, every policy may have specific exclusions as part of its CGL. A few common ones are listed below:

• Although a CGL may help cover injury to others, it doesn’t cover injury to yourself or your employees as that would fall under WorkSafeBC.
• A CGL would not cover the cost required to redo work because of a customer complaint.
• Many types of damages are covered under a CGL, but if you make an error which causes financial loss to a customer, this would likely not be covered. In this scenario, you would need Professional Liability/Errors and Omissions.

6. I need to provide proof of insurance to my lender. What kind of theft or fire insurance do I need?

Fire and Theft are typically included under an All Risk or Broad Form type of Property Coverage. We recommend providing a copy of your lender’s contractual requirements to your insurance advisor to ensure that you have proper coverage. A Certificate of Insurance can also be requested at any time. This is a document that proves the coverage you have in force under your policy. 

7. I’m doing leasehold improvements in my office. What kind of insurance do I need to have during construction?

It depends on the scope and length of the project. It is best to advise your insurance provider of the type of work that will be done and the estimated length of the project so they can confirm if your current coverage would extend to cover this work. It is also important to ensure that all the contractors working on this project have their own Liability and WorkSafeBC policies in place. Your provider will then be able to let you know if a separate policy is required, such as a Course of Construction or a Wrap Up Liability policy.

8. I recently incorporated my business. Do I need to change my insurance policy?

Yes, when you transition from operating under your personal name to an incorporated entity, you will need to inform your insurance provider so they can amend the “named insured” on your policy to the name of the corporate entity. A certificate of incorporation may be required to serve as evidence of the newly formed entity.

9. I run my business out of my home. Do I still need small business insurance or does my home policy cover me?

Home insurance covers personal property, and injury or damages to others, but the limits are often too low to fully protect a business, even a small one. If you’re an accountant, for example, and someone falls in your home while picking up a tax return, basic home insurance may not provide enough coverage to protect you if you’re sued.

Many home and renter’s insurance policies also have specific exclusions in place to prevent you from submitting a claim if it pertains to your business. It is highly recommended you consult with your personal lines insurer as well as an insurance advisor to see what type of coverage is available, and if necessary, purchase an additional small business insurance policy that provides the coverage you need.

If you’re a BCAA Member, you can save up to 10% on your BCAA Small Business Insurance policy. To learn more about small business insurance, visit bcaa.com/smallbusiness or email smallbusiness@bcaa.com.