Small Business Insurance Explained

It was 10 years ago when I became a small business owner. I started small with this blog, but over the years, I’ve become a media consultant, freelance writer, brand ambassador and more. While growing my business, I’ve made a few mistakes but learned from them.

I would argue that my biggest mistake was not having enough insurance. I only looked into it because one of my clients required me to have a policy before I could be onboarded. It seems like I’m not the only one with this thinking, as a recent TD Survey found that many freelancers, entrepreneurs, and small business owners haven’t taken appropriate action to protect their businesses. I spoke with Tang Hung Trang, Vice President, Small Business Insurance at TD Insurance and he explains everything you need to know about small business insurance.

How important is it for solopreneurs and small business owners to have insurance? 

Whether you run a hair salon or own your own photography studio, it can take a lot to run your small business. Business owners have the passion and drive to take on challenges, but they also need to protect what they’ve worked so hard to build. One way for small business owners to financially protect themselves from unforeseen events is through a customized business insurance policy. 

A recent TD Insurance survey revealed that many small businesses are not taking the right steps to protect their business, putting themselves and their business at a greater risk for unexpected costs. Just over half of small businesses with one or more employees have small business insurance protection. This is even lower among solopreneurs (entrepreneurs who are the only employee of their business), where only 33 per cent have small business insurance protection.  

What about freelancers who only work at home? Do they need insurance? Does their home insurance cover them? 

Small business owners may believe that they don’t need insurance. For example, those who run a business out of their home may assume their homeowner’s insurance policy covers them, but that’s not always the case. The coverage limits in a standard home insurance policy may be much lower than the coverage you would receive through a business insurance policy. There are also certain types of coverage that your home insurance policy may not cover. For example, if your business is temporarily shut down due to an insured event, you may not be covered for any loss of income during this period.  

Can you explain the difference between professional liability and commercial general liability insurance? 

Commercial General Liability Insurance protects you and your business from financial losses caused by third party claims involving bodily injuries, property damage, as well as personal and advertising injury resulting from your products, services or operations. 

Professional liability insurance, also known as errors and omissions insurance, is financial coverage related to claims associated with inadequate work or negligent action. This may include failing to provide services to a client in an agreed timeframe leading to your client suffering a financial loss.  

Do business owners with employees need more insurance? 

Small Business Insurance should be customized to specific business’ needs, and TD Insurance is set up to help small business owners understand their coverage options and create a tailored insurance plan. We recommend connecting with a licensed TD Insurance Advisor for advice on the right type of insurance that meets the unique needs of their business.  

What’s the biggest misconception about insurance? 

Many small business owners may not realize that they are not currently insured. For example, many business owners believe their personal auto policy automatically includes coverage for commercial usage, but that is not always the case. Often, small business owners require clarity on the insurance coverages they require for their business. This is supported by a recent TD Insurance survey, where 1 in 3 small business owners indicated they have a weak understanding of the types of insurance coverages specific to their businesses.   

How much does small business insurance cost in general? 

The cost of insurance is dependent on a range of factors including, but not limited to, the value of the company assets you wish to insure, the specific risks associated with your industry, and your previous claims history. With the recent launch of our digital quoter, we also offer small business owners the ability to get a quote online tailored to their specific business profile. In addition, they can also speak to a licensed TD Insurance advisor to determine the right insurance coverage customized to the unique needs of their business.   

What’s the best way for people to get more information about insurance for their business needs? 

Like I mentioned, we recommend for small business owners to speak with one of our licenced TD Insurance Advisors to learn more about our small business insurance products or visit TD Insurance for Business for more information.  

Final thoughts

Small business insurance is no different from any other type of insurance. You hope you never need to use it, but you’ll be glad that you have it if you ever need to make a claim. What I’ve personally noticed as of late is that most of my clients require me to be insured before they take me on as a contractor. Small business insurance is relatively inexpensive and it counts as a business expense. It’s worth noting that small business insurance isn’t the only type of insurance you may need. You should also look into disability insurance, life insurance, and critical illness insurance.