Small Business Insurance BC: FAQ from business owners in Vancouver

Business insurance is one of the key types of policies offered by Habitat Insurance Agencies.  We receive calls on a daily basis from established business owners and people who are just starting new businesses requesting quotes and information about business insurance coverage.  Below are some of the most frequently asked questions (along with our answers) from our clients:

I’m a small business owner.  Do I need business insurance?

Yes, you do!  Statistically, a large percentage of businesses – particularly small businesses do not have insurance.  However, it’s often small business owners who are financially devastated by a loss that could have otherwise been insured.

How much does business insurance cost?

Business insurance premiums vary based on a number of factors, including:

• Type of business
• Business experience
• Gross revenue
• Location
• Types of coverages required

OK, but right now I’m working on a business plan.  Can you give me a ballpark figure as to how much my business insurance will cost?

For individuals who are still at the planning stage of their business development, we advise budgeting 1% of estimated gross revenue over 12 months for business insurance.  Please note, that this figure can vary greatly, depending on the type of business and the extent of insurance coverage required.

What kinds of insurance does my new business need?

The risk assessment process is the basis for determining what insurance you need. Many insurance companies provide a wide variety of business property and casualty coverages. These can be underwritten individually and tailored to your specific business.  Typical components of a business insurance policy are:

• Property coverage – for stock, equipment, building, and tenant’s improvements
• Liability coverage – for third party liability insurance claims
• Business interruption coverage – to provide income in the event a claim stops or slows your business

Of course, there are many other types of coverages to consider.  A good insurance broker will help evaluate your needs to determine the most relevant coverage required.

How do I find the best-priced business insurance?

Use a reputable business insurance broker… because good insurance isn’t just about getting the lowest premium! A good insurance broker is one who is experienced in commercial insurance, takes the time to understand your business, and who shops around with various insurers to get you the best insurance quotes.  The broker should also carefully review all aspects of the business insurance package you are offered before you commit.

How can I reduce the cost of my business insurance?

One way to reduce your insurance premium is by raising your deductible, which is the amount you will pay in the event of a claim.  You’ll have to pay more to make a claim but your annual premium will be lower.  The key point is to think carefully – before a claim occurs – as to how comfortable you would feel about paying a higher deductible should you need to make a claim on your business insurance policy.

How frequently should my business insurance be reviewed?

At a minimum, your business insurance should be reviewed with you by your broker every year.  That said, if there are any material changes in your business (for example, different services being offered, new property or location acquired, etc), you should contact your broker to have these changes reflected in your business insurance policy.

Should you fail to report any important changes to your broker, you may find that you will not be entitled to full or any compensation for a claim.

Do I need liability coverage?

Yes, all business owners should view liability coverage as a key part of their business insurance policy.  Liability coverage provides coverage against third-party claims for which you are responsible, including bodily injury, property damage, slander, and libel.  Certain types of business may require specialized types of liability insurance, known as errors and omissions or professional liability insurance.  Doctors, accountants, and instructors are just some of the fields that may require specialized liability coverage.

What do I do next?

OK – I’m interested in getting business insurance. What are the next steps?

First, contact a reputable insurance broker.  He or she will ask a few questions about your business in order to get an overview of your business operations and then ask that you complete an application form.  If you have a policy already in place, it’s a good idea to give this to the broker in order to see what coverages are currently in place.  The broker may suggest that you consider increased limits and different coverages.

Once you’ve completed and returned the application form to the broker, it will be submitted to various insurance companies for consideration and quotes.  (This is how the broker shops around for you.)

Depending on the risk, insurance company underwriters may have additional questions for you to answer.  It’s important to be accurate in your responses:  any error or omission can result in potential problems should you get insurance, and the information is found to be incorrect at the time of a claim.

Your broker should then go over the best quotes with you, focusing on the premium, what is covered under the policy and, importantly, what is not covered.  There may also be conditions of the insurance – make sure that you are fully able to comply with these conditions before agreeing to purchase a business insurance policy.

Do I have to pay the full amount upfront?

Business insurance seems expensive to me.

No, you don’t.  Most of the time, an insurance policy can be paid in monthly installments or in 2 or 3 payments.  The insurance company may charge a small financing fee to do set this up:  3% to 4% of the total premium is typical.

What does the insurance broker charge me?

Nothing!  Independent insurance brokers earn commission fees from insurance companies for policies sold.  So when you get a quote from an insurance broker,  that is the total amount that you pay.  Application processing, quote, and any professional advice you receive from an insurance broker are typically provided free of charge.

Are you interested in getting a complimentary business insurance quote or more information? 

Please contact Habitat Insurance Agencies at 604-438-5241 or email [email protected].  One of our professional brokers will be happy to assist you. 

Copyright © Habitat Insurance Agencies Ltd.   All rights reserved. Disclaimer:  This article is designed to provide information for personal use only.  Please consult your professional insurance broker for professional advice. Habitat Insurance Agencies Ltd is not responsible for any legal disputes of this matter.