Insurance for online retailers in Canada explained
Unfortunately there is a lot of misleading and incorrect information out there regarding insurance for online retailers in Canada so we prepared this post entitled “Insurance for online retailers in Canada explained”. Our goal is to help educate and inform the Canadian online retailing community and ultimately protect your personal and business assets as there are real risks associated with being on online retailer of any/all products.
Our insurance for online retailers in Canada explained post is a bit different than others we’ve written as it’s primarily a list of questions of frequently asked questions from a leading online retailer that also administers one of the most informative facebook groups for Canadian online retailers. The following Q&A are real questions and answers from that group…
Commonly Asked Questions about insurance for online retailers in Canada…
Q. I read pro merchants need to have $1 million in commercial general liability coverage, are you able to provide that for both Canada and US?
A. Yes. Provided you have a Canadian legal entity or are a Canadian citizen with a Canadian mailing address our brokerage ALIGNED Insurance can place commercial general liability insurance for CDN, US and Global sales and we help many online retailers with this already.
Q. Can you insure me if I’m a sole proprietor or do I have to have a corporation?
A. Yes. To be insured or insurable, you don’t have to have a corporation. A policy can be placed under your personal name or under legal entity.
Q. I’ve read about people getting insurance from a US-based company, but they have to have a US mailbox. That seems kinda sketchy to me, does that make sense if I’m a Canadian?
A. I’ve unfortunately heard of this scam too and it’s not just sketchy…it’s fraudulent and misleading. To be legitimate insurance for a Canadian legal entity or sole proprietor in Canada must be, and can only be, purchased from a licensed insurance company in Canada and placed by a licensed insurance broker in the province the client lives or is incorporated in.
Q. Are Canadian policies actually enforceable if I’m selling into the US? Absolutely.
A. Properly placed policies can include North American or Worldwide territory clauses and if desired can even cover suits filed in the US and Canada or just in Canada.
Q. I sell children’s toys, are you able to cover me?
A. Yes. This category is considered high risk and the premiums are higher, but provided appropriate QA and product testing documentation is available we’ve yet to encounter a product we can’t secure coverage for.
Q. What provinces can you cover?
A. We have licensing in all provinces except Quebec.
Q. What if I sell a mix of items like retail arbitrage, online arbitrage, and wholesale.? Can I still get coverage?
A. Yes. We just need to have a breakdown of the annual revenue from each type or retailing, the products or product categories and % split between CDN, US & Global sales.
Q. If I got sued in the US, how might that work with my insurance company?
A. Most suits are brought in the jurisdiction where the company or person has assisted so it’s rare that a Canadian online retailer would be sued in the US, but we structure our policies to cover suits brought in the US too in case it does happen. Coverage for defence costs and settlements or judgments against you can both be covered.
Q. Would my home insurance cover say my inventory if the house caught fire?
A. This is an important question. If you are running a business out of your personal residence that you haven’t disclosed to your insurer the insurance company has the ability to deny your claim fully in some cases. All business activities or inventory stored in a home should be formally reported to your personal home insurer. Some will require you to provide evidence of separate commercial general liability and/or property insurance for your business assets in the residence. We can assist with both as needed.