What is the Best Type of Insurance for Small Businesses?
Running a small business in Nova Scotia requires wearing many hats — owner, marketing manager, customer service rep, IT support and more. With so much on your plate, insurance might not be at the top of your “to-do list.” However, the right business insurance coverage can mean the difference between recovering from a setback or shutting your doors for good.
So, what are the best types of insurance for small businesses? The short answer: it depends on your business. The long answer: you’ll likely need a combination of coverages to protect your operation from the unique risks you face. Let’s break it down in this helpful blog.
1. Commercial General Liability Insurance (CGL) – a bedrock insurance coverage
This is the foundational coverage for any small business. It protects against claims of bodily injury, property damage, or personal injury (such as slander or libel) resulting from your business operations. Even home-based businesses should consider this coverage. Standard home insurance generally does not cover liability issues related to business activities.
Example: A customer slips and falls in your shop, or a product you sell causes damage — CGL has your back.
2. Commercial Property Insurance – for all your business stuff
Whether you own a building or lease a space, commercial property insurance covers your physical assets — inventory, equipment, furniture, and computers — in case of fire, theft, or natural disaster.
Tip: If you run your business from home, don’t assume your home insurance will protect your business equipment. You may need to add a rider or get a separate policy.
3. Directors and Officers Liability Insurance – helps cover unplanned legal expenses
D&O coverage is liability insurance that is payable to the directors and officers of a company as indemnification (reimbursement) for losses or advancement of legal costs. This may require legal action against an insured company director for alleged wrongful acts performed in their capacity with the business.
Example: Most companies require this insurance, including for-profit (private or publicly traded firms) and non-profit businesses (such as educational institutions).
4. Business Interruption Insurance – provides a level of income protection
What happens if your business temporarily closes due to a fire, flood, or another insured event? Business interruption insurance covers lost income and helps pay ongoing expenses like rent and payroll while you get back on your feet.
Tip: This coverage is often bundled with property insurance and is especially important for brick-and-mortar businesses.
5. Professional Liability Insurance – a must for service providers
Also known as Errors and Omissions (E&O) insurance, this coverage is essential for businesses that provide advice or services. It protects against claims of negligence or failure to deliver promised services. Learn more by reading this helpful blog, What’s the Difference Between General and Professional Liability Insurance?
Example: If you’re a consultant and your client claims your advice caused them a financial loss, E&O insurance can cover legal fees and damages.
6. Cyber Insurance – don’t overlook growing digital risks
Small businesses are increasingly targeted by cyber-criminals. Cyber insurance helps cover costs associated with data breaches, ransomware attacks, and other digital threats — including customer notifications, credit monitoring, and legal fees.
The fact is that a business is nine times (9x) more likely to be hacked than to have a fire. Plus, businesses with fewer than 100 employees are the target of a cyberattack 3 out of 4 times. To learn more, check out our webpage: Cyber Insurance for Businesses.
Tip: If you store customer information, take online payments, or rely on cloud-based systems, this coverage is worth considering.
7. Workers’ Compensation – If You Have Employees
In most provinces, if you hire even one employee, you must obtain workers’ compensation. This coverage benefits workers injured on the job by addressing medical expenses and lost wages.
Tip: Confirm your obligations with your provincial workers’ compensation board.
The best insurance coverage for your small business depends on your industry, size, and specific risks. For example, a home-based freelance writer won’t need the same policy as a retail shop or a contractor. Be sure to check out our blog on 7 Small Business Insurance Mistakes and How to Avoid Them if you have more questions!
At Bauld Insurance, we specialize in helping small business owners understand their risks and build a custom insurance plan that fits their needs and budget. Contact us today for advice on the right insurance for your business!
