How much is business insurance in Canada?

As a business owner, business insurance is key to keeping yourself, your employees, and your business protected from the unexpected. 

Business insurance acts as a safety net, covering a wide range of potential risks that could otherwise be extremely costly. These risks include anything from property damage caused by a fire or flood, to liability if someone gets injured on your premises, and even legal costs if you're sued for professional negligence. 

Essentially, business insurance helps ensure you’re not left bearing the full brunt of these unexpected situations. 

But how much does business insurance actually cost? The answer varies based on your business type, location, and the kind of coverage you need.

How much is business insurance?

The cost of business insurance in Canada can vary depending on the type of coverage, the industry, and the size of the business. 

Here’s a breakdown of the average costs for some common types of business insurance:

• General liability insurance

General liability insurance protects your business from third-party claims for things like bodily injury or property damage that happen during your day-to-day operations. 

If a customer falls down in your restaurant or an employee damages a client's property, your policy will cover costs like legal fees, medical expenses, and compensation. 

The cost can range from $400 to over $1000 per year, depending on the size and nature of the business.

• Professional liability insurance

Professional liability insurance, also known as errors and omissions insurance, this coverage is essential for businesses that provide professional services, like doctors, investment advisors, accountants, etc. 

It protects against claims of negligence or inadequate work. 

Costs generally start at $500 - $2,500 per year, depending on the industry, number of clients/patients, and coverage limits.

• Product liability insurance

If your business manufactures or sells products, you need product liability insurance. 

It covers legal fees and settlements if a product causes harm. This can happen in any industry, from a coffee shop customer getting burned on a hot cup of coffee, to a driver whose brakes fail and cause a collision. 

Costs can vary widely, starting at $800 annually depending on the risk associated with the products.

• Cyber insurance

With increasing cyber threats, cyber liability insurance is becoming more popular, especially for businesses that handle sensitive customer information. 

The cost typically starts around $1,500 per year and can increase based on the level of coverage and the size of the business.

• Commercial auto insurance

If your business uses vehicles for operations, personal car insurance won’t cover you – commercial auto insurance is necessary. 

The cost depends on the number of vehicles, their use, and driver history, with premiums starting at $500 annually per vehicle.

Factors that impact your business insurance quote

The cost of your business insurance premiums can be influenced by several factors. Understanding them can help you better manage and potentially reduce your insurance costs.

Here are some factors that impact how much you’ll pay for business insurance:

• How big is your business? 

Larger businesses typically require more coverage, which leads to higher premiums. The number of employees and annual revenue can also impact costs.

• How risky is your industry?

High-risk industries, like construction or manufacturing, often have higher insurance premiums due to the increased likelihood of injury and claims. Think about it, which would be riskier to insure - a water park, or a hair salon? 

• Where is the business located?

Where your business operates plays a role. Maybe your business is located in an area with high crime rates, or a location prone to flooding? In those situations, premiums would be higher than they would be for similar businesses located in lower-risk areas. 

• Have you made any claims before?

If your business has a history of filing insurance claims, you might face higher premiums as insurers perceive you as a higher risk.

• How much coverage do you need?

The more coverage you need, the more expensive your insurance will be. Customizing your policy to include specific endorsements or higher coverage limits will also increase costs.

How to save on business insurance

Despite the costs, there are many ways to save on business insurance without compromising on coverage. 

Here are a few:

First, shop around

Don’t settle for the first quote you receive. Comparing rates from different insurers can lead to significant savings.

Next, look into bundling your policies

Many insurers offer discounts if you bundle multiple types of insurance, like general liability and property insurance.

Ask about increasing your deductible

Choosing a higher deductible can lower your premiums. Just be sure you have the funds available to cover the deductible in case of a claim.

And finally, review your policy often

As your business grows and changes, your insurance needs might change as well. Regularly reviewing your policy ensures you’re not over-insured or under-insured and can help you find areas to cut costs.

The bottom line

Understanding the cost of business insurance in Canada is something every business owner needs to do. 

While the costs will vary based on your industry, location, and specific needs, being in-the-know about what influences these costs and how to save on premiums can help you make the best decisions for your business. 

By looking at the factors that affect your insurance quote and exploring ways to save, you can find a policy that offers the protection you need without breaking the bank. 

And remember, it’s always a good idea to review your insurance needs regularly to ensure you’re getting the best coverage for the best price.

Also read: 

• Do I need business insurance for my side hustle?
• Is business insurance tax deductible in Canada?
• E-commerce business insurance – what you need to know