Why You Should Opt for Sole Proprietorship Insurance in Canada

 

“A sole proprietorship is an unincorporated business that is owned by one individual. It is the simplest kind of business structure.

The owner of a sole proprietorship has sole responsibility for making decisions, receives all the profits, claims all losses, and does not have separate legal status from the business. If you are a sole proprietor, you also assume all the risks of the business. The risks extend even to your personal property and assets.” 

These words from the Government of Canada on their “Setting up your business > Sole proprietorship” page articulate just how essential risk management is to sole proprietorship. A single lawsuit could take away everything you’ve worked for. With Sole Proprietorship Insurance in Canada, you can protect yourself from risk and still choose the business structure that makes the most sense for your business. Enjoy the freedom and flexibility of your business without losing sleep over being bankrupted by a lawsuit.

Statistics on Self-Employment and Small Businesses in Canada 

• 15% of total employment in Canada is made up of self-employed individuals  
• 1/3 of self-employed Canadians said that freedom, independence and being their own boss was why they chose self-employment with “nature of the job” being the second most cited reason. ² 
• For self-employed Canadians 55 and older, freedom and independence were a more likely factor for becoming self-employed ²
• Self-employment has increased in professional, scientific and technical services ² 
• Businesses with 1 to 4 employees represent 54.8% of all private employers in Canada

What Type of Business is your Sole Proprietorship In?

The answer to this question will answer other questions you likely have about sole proprietorship insurance in Canada, including “What kind of coverage do I need?”, and “How much does sole proprietorship insurance in Canada cost?”. 

If you’re a professional and provide consulting services you will definitely need Errors & Omissions (E&O) / Professional Liability insurance to help guard against lawsuits alleging negligence; whereas if you’re a blogger, run a digital marketing firm or are otherwise involved with media, you will need Media Professional Liability Insurance as protection against legal claims of libel, slander and copyright infringement – among others. Visit our Small Business Insurance Products page for a list of popular insurance products for sole proprietorships and other small businesses in Canada.

The list on that page is by no means exhaustive so if you don’t see your field listed, contact an ALIGNED broker for information regarding your business. But first, let’s review some of the basic coverages that will likely be included in your business liability insurance policy.

What Type of Business Insurance Do I Need as a Sole Proprietor?

It depends on the type of sole proprietor business you own, your daily operations, and the types of products or services you sell. For example, if you are a consultant, freelancing designer, accountant, web developer, or another type of business that offers specialized advice or services for a fee, professional liability insurance is an important consideration. It ensures you and your business is covered for legal expenses in the event of financial loss due to the negligence, misconduct, or errors you make while providing your services.

Commercial general liability insurance is one of the most common commercial insurance products in the market. Regardless of what type of sole proprietorship business you own or what products or services you sell, it’s worth the investment to purchase commercial general liability insurance. It protects you and your business against claims of property damage and bodily injury that a third party suffers while on your premises, such as a slip-and-fall accident.

Other types of business insurance options you might consider as a sole proprietor include:

• Cyber liability insurance
• Product liability insurance
• Commercial property insurance
• Commercial auto insurance
• Equipment breakdown insurance
• Liquor liability insurance

Do I Need Insurance as a Sole Proprietorship Business?

It’s always a good idea to consider purchasing some type of commercial insurance for your sole proprietorship business. Sole proprietors have the same legal responsibilities and liabilities as large corporations. While performing their services, sole proprietors could be subject to various third-party claims or property damage that lead to costly repercussions. In some cases, these costly repercussions could force your small business to shut down.

For example, if a customer falls and gets injured on your premises, they could file a lawsuit citing bodily injury. There will be medical bills, legal fees, and other settlement awards that need to be paid out. If you sell a faulty product that results in a customer getting injured or suffering property damage, you might also be subject to liability and litigation.

That’s why purchasing robust insurance coverage is necessary, even if you don’t think you’ll ever encounter any risks or accidents. ALIGNED can get you fitted with the right sole proprietorship insurance policy to help your business stay protected.

Will Sole Proprietorship Insurance Cover if I Get Injured?

Generally, worker injuries are handled by the WSIB. If you are injured on the job, you could file a claim with the WSIB. Workers that suffer occupational injury or illness could receive workers’ compensation benefits. If you have employees under your sole proprietorship, workers’ compensation benefits mean that your employees would receive compensation benefits and give up the right to sue you for their injury or illness.

Sole Proprietorship Insurance in Canada, what does it Cover?

Commercial General Liability Insurance

This coverage is for all businesses: big, small, corporations, LLCs and sole proprietorships. Of course, the amount of protection needed depends on the type of work being done. Commercial General Liability (CGL) protects businesses from lawsuits related to bodily injury, property damage and false advertising stemming from their products, services and/or business operations. It can help cover legal costs to defend the lawsuit which you will need to do even if a lawsuit is completely baseless. It can also cover settlements and awards for damages so that you don’t have to worry about losing your personal assets.

Commercial Property Insurance

Even if operating your business out of your home, commercial property insurance should be included as part of your Canadian sole proprietorship insurance plan. If your home was to suffer a fire, flood, sewage backup, or any other covered peril, your business equipment and supplies – including computers, printers, office supplies, and other business assets – would not likely be covered by your home insurance policy. In fact, if the cause of the peril is related to your business, your home insurance provider may even void your coverage outright. 

Commercial Auto Insurance

If your work involves driving out to meet clients, performing on-site assessments or driving for any other business-related purposes, having Commercial Auto coverage included in your sole proprietorship insurance is a must in Canada. Like your home insurance policy, your personal auto insurance policy likely does not cover business-related driving, leaving you unprotected if you’re involved in an accident.

Cyber Liability Insurance

How many times in a week do you get suspicious emails? Cybercriminals are constantly on the prowl looking for businesses of all sizes to extort and steal from. Just because you’re a small business, doesn’t mean you’re not at risk. Small businesses are quickly becoming a popular target for ransomware. Cyber liability coverage in a sole proprietorship insurance policy can cover ransom costs and several other expenses stemming from a cyberattack.       

Get ALIGNED with Sole Proprietorship Insurance in Canada from Business Insurance Specialists

No matter what field you’re in, ALIGNED can get you specialized coverage that’s written to protect your business at rates that can easily fit your budget. Our brokers are advocates who represent your interests and work to get you some of the best commercial insurance rates available in the industry. Contact an ALIGNED Insurance Advocate for a free quote.