Business insurance: covered perils

That's why insurers offer different coverages depending on the type of professional activity and your particular needs. You decide what you want to insure based on your needs and what your insurer offers.

Damage caused to a third party

You need liability insurance for damage caused to an individual or to his property as a result of your business activities or your work, This can cover the amount claimed by this individual, as well as legal defence costs.

For example:

• When making a delivery, your employee damages your client's premises. The client asks you to reimburse him for the cost of the repairs.
• A client fractures a limb in your place of business. He asks you to reimburse his medical expenses and loss of income.
• You break a glass door on the premises housing your business. The building owner asks you to reimburse him for the replacement cost of the glass.
• Your advertisements put another company in an embarrassing situation. It asks you to pay damages.

Thanks to the four warranties included in your liability insurance for your business, you are covered:

1. Warranty A, called Bodily injury and property damage

2. Warranty B, called Harm attributable to public advertising

3. Warranty C, called Medical fees

4. Warranty D, called Tenant's liability, which covers damages caused to the workspace you are renting.

Professional liability insurance

Errors you make as a professional are not covered under your liability insurance. You therefore need professional liability coverage to protect yourself against such errors.

Examples of professional errors:

• You are a translator and you make a serious error in your translation. This error causes financial damage to your client, who asks to be reimbursed.
• You are an accountant and you make a mistake while filing a tax return for one of your client.

Damage caused to your business property

The list of property used for professional purposes can be long! It includes:

• Computer equipment
• Machinery
• Furniture, books, software and files
• Professional instruments
• Plant, garage or building
• Merchandises you sell and stock
• Merchandises you use to manufacture your products

Add up the value of the property and you'll soon see that, in case of loss, the bill can go up very quickly! Avoid unpleasant surprises and protect your property adequately by choosing the appropriate coverage.

What about water damages?

Water damage occurs quite frequently and is not automatically included under your business insurance policy. Avoid any unpleasant surprises. Talk to your broker. He or she will explain what is and isn’t covered in this type of situation.

Other coverage

Depending on the nature of your work, you may need other coverage. For example:

Coverage designed for builders

This coverage insures the property on the construction site and that is part of the construction (plumbing, heating, electrical, etc.). However, damage caused by theft or vandalism on site are not covered.

Coverage in case of business interruption
This coverage can come in handy in the following instances:

• A fire prevents you from working and you lose clients and income. This coverage may cover the salary of your key employees. Ask your insurer about other kinds of coverage to cover your salary.
• Your place of business has suffered water damage and you have to temporarily rent new premises. The additional cost of this rental will be covered.
• Your building suffers damages and your tenants need to be relocated. The rents not paid by your tenants as a result of their relocation will be covered.

Coverage for the dishonest acts of an employee
Examples of dishonest acts include:

• Embezzlement
• Loss or deterioration on the premises
• Forgery of bank notes

Coverage for client accounts, valuable papers and records, and professional fees
This coverage may be very useful in the following instances:

• You lose your client accounts list following a covered loss, and can't follow-up on accounts receivable. You could be reimbursed the amount of these receivables.
• Valuable documents are stolen (notarized contracts, shares, bonds, architect's drawings, etc.). You could be reimbursed the value of these documents.
• Following a loss, you need an accountant to assess the value of your lost earnings due to the loss. The fees of the accountant or any other professional will be covered.

Coverage for natural disasters and clean-up of pollutants

• Earthquake
• Flooding
• Water damage caused by seepage through the roof
• Sewer back-up
• Clean-up of polluted water and soil

Damages caused by these events are not covered by your basic business insurance policy. However, you can add additional protections to your insurance policy, or in a separate document appended to your policy (called “endorsements” by insurers).

Damage excluded under your business insurance policy

Certain damages are excluded under a business insurance policy. However, you can add additional protections to your insurance policy.

Examples:

• Flooding *
• Sewer back-up *
• Earthquake *
• Water damage *
• Water or ground contamination *
• Fungi and spores
• Nuclear risk, terrorism and war

Ask your insurer to explain these risks to you so that you can make an educated choice and avoid any surprises in case of loss.

* May be covered by adding additional protection to your insurance policy.