Business Insurance

Summary

WHY IS BUSINESS INSURANCE IMPORTANT?

Your business may have many assets - vehicles, an office and equipment, inventory, an indispensable employee or partner and most importantly, yourself. To ensure your business is as free from risk as possible, business insurance is necessary.

To discuss your business insurance options, contact an insurance representative to find or develop a plan that is right for you and your business.

TYPES OF INSURANCE

There are many types of insurance and packages offered by insurance companies. The following are descriptions of various types of insurance and why you may need them.

Insurance for Owners, Partners and Key Employees

• Life Insurance - This protects family and is especially important in a sole proprietorship because the owner is personally liable for all debts of the company.

• Disability Insurance - For business owners and operators, whose livelihood depends on their ability to run a business. Disability insurance is essential, as this insurance is designed to cover income for up to 52 weeks.

• Critical Illness Insurance - This is a personal insurance policy that provides a tax-free lump sum benefit to a business owner if he or she is diagnosed with a critical illness such as a stroke, heart attack, and cancer.

• Partnership Insurance - Designed to protect a surviving partner and the business by allowing him/her to purchase the shares of the deceased to continue the business and offset the tax liability that would otherwise exist without the buy-sell agreement.

• Key Person Insurance - This policy covers the cost of the loss of an integral member of your business team. If the essential person should be unable to work for a period of time, the insurance helps to cover the loss of business as a result of the illness or injury.
  

Business Property and Liability Insurance

• Vehicle Insurance - Your personal vehicle insurance is inadequate if you are using the vehicle for business purposes. Your insurance policy must include the use of your vehicle for business purposes.

• Product or Service Liability Insurance - Protects you in the event you are sued by a client/customer for nonperformance of a contract or a product and any liability arising from the nonperformance.

• General Liability - Covers injury to clients and employees on your premises or elsewhere either in the performance of duties for the company or involving activities of the company.
• Business Premises and Contents Insurance - Whether your office is in your home or elsewhere this insurance covers damage, loss or theft of property. If you work from home, it is unlikely your basic house and contents insurance will be adequate. Be sure your existing homeowner's policy is not voided by the operation of a business on the premises.

QUESTIONS TO ASK YOUR INSURANCE REPRESENTATIVE

What kind of insurance do I need?

What is not covered in my policy?

Are there risks or hazards for which I cannot buy insurance?

Will my homeowners' policy cover my home business?

If my business is home-based, do I need more liability coverage than my home insurance policy covers?

What is my deductible and how does it affect my premium?

WHAT CAN YOU DO TO LOWER INSURANCE COSTS?

You can protect your property and reduce insurance costs by making good loss prevention choices; the following is a list of some loss prevention steps to consider:

• Install approved sprinklers, intruder alarms and fire alarms.
• Strongly secure all doors, windows and skylights.
• Secure storage and other low-traffic areas.
• Isolate flammable materials and dispose of waste materials properly.
• Leave some lights on and windows clear so police patrols can view the interior.
• Encourage employees to protect the company by being watchful and careful.
• Back up your computer files frequently and store copies off premises.
• Register with your local police and fire department so that they know who to call in an emergency.
• Consider hiring a security guard when conditions warrant.

Source: Insurance Bureau of Canada: Business and Commercial Insurance, http://www.ibc.ca

REFERENCE LIBRARY

The Canada/Nova Scotia Business Service Centre (C/NSBSC) Reference Library is a great resource for potential and established entrepreneurs. Resources are available for the public's use within the library during regular hours of operation. The following lists some of the Insurance resources available for use in the C/NSBSC Reference Library:

Bromwich, Geoffrey R.E., Insuring Business Risks in Canada : How to Get the Most for your Money Self-Counsel Press, North Vancouver, B.C., 03/1990.

Managing Your Small Business, Entrepreneur Magazine Group

Nishan, Swais, Canadian Legal Guide for Small Business, Self-Counsel Press,10/1999.

WEB SITES OF INTEREST

Insurance Bureau of Canada - http://www.ibc.ca

Questions to ask your insurance representative - http://www.ibc.ca/pdffiles/publications/brochures/consumer/questions_to_ask_comm_ins_sml_business.pdf

If you are unable to access any of the above websites, please call one of our Business Information Officers who may be able to provide you with the contact information you need.