Ontario Startup Insurance

The Challenges Faced By Startups

One of the most exciting things someone can do in their life is to start their own business. Becoming the founder of a small business gives you the freedom to decide what you do on a day-to-day basis and lets you work on something that you’re passionate about. Whether you’re a young recent graduate who wants to provide a fresh viewpoint in your industry with new ideas, someone who’s been in your industry for a couple of decades and wants to use that experience to guide your new venture as a sole proprietor, or someone who’s bringing out a new horse to the entrepreneurial rodeo they’ve ventured through before, your heart is probably pumping from the excitement of having this level of freedom. However, freedom always comes with risk.

Being a business owner exposes you to many risks that ordinary employees don’t have to worry about. For example, a damaged or robbed office would likely inconvenience regular employees, but at the end of the day, they probably don’t have to worry about it that much. The business owner, on the other hand, will likely be very stressed, as it has caused a situation where they are now responsible for paying a lot of money to repair damage or replace lost inventory. This is why it’s important to keep track of inventory in case of a loss. This is also true with lawsuits, damaged equipment, bodily injuries to other employees, etc. Such expenses could cause a new business owner substantial financial hardship, often easily costing thousands of dollars, and even end the business venture entirely. However, getting startup insurance, also known as small business insurance, can give the owner peace of mind, knowing that even if something terrible happens, they’re covered up to their policy limits, and their business will survive.

What Is Startup Insurance?

Startup insurance is commercial insurance for businesses that are just starting out. Many professionals are afraid to start their own business due to all of the risks involved. While you can mitigate plenty of these risks by learning new skills, many of them are completely outside of your control. These are often external factors including natural disasters, frivolous and baseless lawsuits, as well as simple accidents caused by sheer back luck. 

Let’s say a new entrepreneur opens up their own business. There are plenty of things that do serious damage to a business without the owner being at fault. A fire from another unit in their building might spread, a slip and fall could occur on their property, or a third party may blame you for an accident that occurs. In these situations, startup insurance will cover any insured who’s policy includes the specific incident that happens.

Why is Startup Insurance Important?

There are plenty of situations where startup insurance can save the business. A common situation is if a customer suffers a slip and fall while on the premises, and they hold the company accountable and file a lawsuit. Another example would be property damage to the office due to a disaster, such as a fire starting in the building, leaving a costly repair bill for the owner. An employee may suffer a work-related injury and hold the business owner responsible for putting them in harm’s way and not following workplace safety guidelines, potentially costing the owner lots of legal fees. Many of these situations can seriously damage a startup, regardless of whether the business owner is at fault or not. 

An uninsured business is exposed to the full financial risks of these situations. Startup companies are at especially high risk due to usually having small budgets, meaning that potential losses from problems like costly lawsuits are more likely to overwhelm them. Depending on the insurance coverage provided, an insured company might have financial protection against potential business risks like legal expenses, medical expenses, physical damage to property, and other costs depending on the policies covered. An insurance plan will cover you for up to your policy limits for any legal costs, medical costs, and any other costs covered by the insurance company.

Who Needs Startup Insurance?

Although most types of businesses are not legally required to have business or startup insurance coverage in Ontario, it is recommended that every business owner protect themselves with startup insurance. Any business owner could easily stumble into a wide range of potential liabilities, especially if they are not prepared. For example, a business owner could face many complicated legal issues due to the complex nature of business that might catch them off guard. For example, a dismissed former employee might be able to launch a wrongful termination case against the company, or a client might accuse the business of causing reputational harm. These are situations where a budding entrepreneur might understandably not know all of the ins and outs, leading to them either missing an obscure law that catches up with them, forgetting to read the fine print, or having a competitor take advantage of the entrepreneur’s inexperienced nature to win a flimsy legal case on a technicality. Given that unexpected losses can easily overwhelm the small budget that startup owners are stuck with, the level of protection that startup insurance provides is extremely valuable.

There are also plenty of issues out of everyone’s control, such as the possibility of a natural disaster or a criminal targeting a business at random might do a lot of damage. Furthermore, many people and businesses will only want to deal with partners and clients who provide proof of insurance to ensure their own protection, further incentivizing business owners to get startup insurance. Startup insurance is a proactive approach designed to give business owners peace of mind that even if they make a drastic mistake or suffer extremely bad luck, their business can survive by being compensated for the financial costs.

What Types Of Insurance Should My Startup Have?

It depends on a lot of factors. There are plenty of common types of business startup insurance, each of which is designed for different risks and different situations. Some types of coverage protect you if something happens to a client while on your premises or under your care. Others will cover you for any physical damage done to your property by fires, third parties, and other things outside of your control.

Each coverage type provides a layer of protection against different situations. Due to different businesses requiring different kinds of startup insurance for different needs, each startup insurance plan will be different. Some companies are fine with only the most basic coverage for startup insurance, while others require more comprehensive coverage. If you are unsure of which startup insurance policies would be best for your situation, we recommend that you speak to your Morison Insurance broker for expert advice. Some examples of startup insurance choices can be seen below:

Commercial Liability Insurance: Protects you against lawsuits dealing with property damage or personal injuries to clients due to your or in some cases, your employees.

Commercial Auto Insurance: Protects you from losses due to damage done to your commercial vehicle or done by your driving while on the job. Personal auto insurance does not cover a vehicle used for commercial purposes.

Commercial Property Insurance: Protects you from financial losses due to damage to a business property. Although you are likely doing everything in your power to stop theft of your equipment, fire, vandalism, and more, things can still go wrong. Depending on coverage selected.

Professional Liability Insurance: Protects you against the financial fallout of a mistake or error made by you or one of your employees, causing a client or customer to sue you for damages. This includes any professional advice you may give.

Please note that this list is only an introduction and only lists the most common, broad and general types of insurance available. These include cyber liability insurance, product liability insurance, business interruption insurance, workers’ compensation insurance, and more. With all of these insurance options, it is understandable to feel overwhelmed and suffer paralysis of analysis. To know which options suit you or get details about any additional coverage, please speak with your Morison Insurance broker.

Does My Startup Need Industry-Specific Insurance?

It depends on what industry you and your startup are in. Given the sheer amount of industries that exist and the fact that most businesses often cross multiple different industries, it’s impossible to provide any definitive answer to if your startup insurance should include industry-specific coverage. As a result, it is best to contact your expert Morison Insurance broker, who will be trained in answering questions specific to your situation. 

How Much Does Insurance For Startups Cost?

It is understandable to be concerned about the price of startup insurance. Startups generally have a very minimal budget that must be spent carefully, meaning that all recurring costs must be considered. Unfortunately, there is no set cost to startup insurance. There are many key factors that determine business insurance premiums. Due to all of the factors involved, each startup insurance policy has different areas that need to be covered. Many of the factors that are involved include:

• The industry that you and your startup are in and any special industry-specific risks involved
• The experience level of you both in your field and as an entrepreneur
• Your claims history
• The location of your business
• Level of coverage that you desire, including types of coverage and coverage limit
• Size of your business and number of people that you employ under you
• Safety precautions and other business practices that can impact potential risks in the workplace
• Details dealing with your building, office space, HQ or base of operations
• Your business’s annual revenue and costs
• Tools, equipment and other content that is at risk within your commercial space

Please keep in mind that this does not list all of the factors involved with the cost of startup insurance. To fully understand the costs and factors that go into it, speak with your Morison Insurance broker, and they will provide you with guidance.

How Can I Lower The Cost Of Insurance For Startups?

While the cost of startup insurance might seem intimidating, you will be happy to know that it is completely possible to lower the insurance cost without scaling back on the amount of coverage that you have. Here is a list of ways in which you can lower the cost of startup insurance without sacrificing your level of coverage.

• Keeping careful records of business procedures showing that you are taking steps to improve risk management. These tasks will vary depending on your industry and the risks involved.
• Showing that you are taking all proper steps to ensure safety in the workplace. This includes increasing the safety of your employees and all others who enter the premises, including clients and customers.
• Increase your deductible to lower the risk to the insurance company.
• Use a Morison Insurance Broker. A Morison Insurance broker can help shop around for the best deal while also looking for opportunities to bundle specific deals together, ensuring you get the best insurance package. Additionally, they will be happy to provide you with advice on continuing to lower your startup insurance premiums. 

Does Personal Insurance Cover Insurance For Startups?

Sadly, personal insurance does not insure your startup for business or commercial purposes. This means that if you use your personal vehicle for commercial purposes or operate your business out of a home office, your personal auto or home insurance won’t cover you in the case of financial loss suffered while operating these objects for business or commercial purposes. Furthermore, assets such as company vehicles used purely for business purposes must be covered by commercial insurance, not personal insurance. For this reason, startup insurance is needed to protect you from dangers that personal insurance does not.

Where Can I Get A Startup Business Insurance Quote?

You can get startup insurance from the brokerage team at Morison Insurance. When you choose to have your insurance handled by us, you are in safe hands. We are a family-run business that treats our customers like an extension of that family. If your insurance is with us, we will get you the best deal possible, both on your startup insurance as well as all other insurance you may need, both personal and commercial. Call us today at 1-800-463-8074, or fill out the form below to get started. You’ll be glad you did.