Commercial liability insurance is one of the most important tools that Ontario small business owners can use to protect themselves.
A business without liability insurance is like a skydiver without a backup parachute. No one expects things to go wrong, but they do, and when they do you will thank the lucky stars you have it.
GET A FREE LIABILITY INSURANCE QUOTE
WHAT IS LIABILITY INSURANCE?
Simply put, liability insurance is a product that protects the insured business from claims of physical injury or property damage.
Other names you’ll hear for it are general liability insurance, third party liability, public liability insurance and CGL insurance.
Some insurance providers (including Erie Mutual Insurance) may also include a legal assistance service along with your liability insurance. Legal assistance can provide unlimited calls to experienced lawyers and HR consultants 24/7.
Learn more about our legal assist program.
WHAT TYPES OF CLAIMS CAN LIABILITY INSURANCE PROTECT A BUSINESS FROM?
The types of claims liability insurance can protect a business owner from include:
BODILY INJURY
A customer sustains an injury after falling on some ice outside of your store. Learn ways you can prevent slip and falls during the winter.
A customer trips on a ladder you have laying on their property while working on the job. Learn about other ways business insurance protects contractors.
A customer gets sick after eating at your restaurant. Learn about other ways commercial insurance protects restaurants.
These are all examples of the type of bodily injury claims that commercial liability insurance can cover.
PROPERTY DAMAGE
You accidentally drop a tool that breaks a window of your client’s home.
You make a mistake and use the wrong cleaning product and ruin your customer’s carpets.
As a computer consultant, you accidentally install a virus onto your customer’s system that damages their software.
These are all examples of the type of property damage claims that commercial liability insurance can cover.
LAWSUITS
You sell a product with an unexpected faulty design which results in an injury to the buyer who decides to sue your business.
You launch a new advertising campaign for your business but unknowingly use a piece of copyrighted material and the owner of said material decides to sue you.
You say something in a public interview that damages the reputation of another business and they decide to sue you for slander.
These are all examples of the type of lawsuit claims that commercial liability insurance can cover.
It’s important to note that liability insurance does NOT cover criminal acts. This means that even if you’re an insured business owner you will not be covered if you’re found legally responsible for an intentional act.
WHAT ABOUT PRODUCT LIABILITY INSURANCE?
Of course!
If your business is involved with creating and / or selling products, Commercial General Liability (CGL) insurance coverage would include product liability insurance as well. This helps protect you from claims of injury or damage as a result of a product defect.
You can learn more about product liability insurance here.
WHAT GENERAL LIABILITY INSURANCE DOES NOT COVER?
General liability insurance does not cover everything.
There are other optional add-ons you can purchase which are not automatically included under a standard commercial liability insurance policy.
COMMERCIAL AUTO INSURANCE
Your commercial vehicle is involved in an accident while travelling between jobs. General liability insurance does not cover this, but commercial auto insurance does.
COMMERCIAL PROPERTY INSURANCE
There is damage sustained to your business property. Whether you’re a tenant or owner of the building, general liability insurance does not cover this, but commercial property insurance does.
LIQUOR LIABILITY INSURANCE
A customer gets into a car accident after consuming alcohol at your restaurant. General liability insurance does not cover this, but the liquor liability insurance does.
Note: While in most cases a restaurant would be covered under their commercial insurance policy depending on their percentage of sales in alcohol, Erie Mutual does not offer liquor liability insurance. Erie Mutual Insurance does not provide insurance to bars whose main focus is on alcohol sales since they would be outside of our risk appetite. If you’re looking for liquor insurance for an event, we recommend purchasing this online through PAL (Party Alcohol Liability).
WORKERS COMPENSATION INSURANCE
An employee gets ill or injured while working for your business. General liability insurance does not cover this, but workers compensation insurance does.
Note: Erie Mutual does not offer workers compensation insurance.
PROFESSIONAL LIABILITY INSURANCE
A professional service provider such as a lawyer, doctor or accountant gets sued for malpractice or negligence. General liability insurance does not cover this, but professional insurance does.
Note: Erie Mutual does not offer professional liability insurance.
WHICH BUSINESSES NEED LIABILITY INSURANCE IN ONTARIO?
Contractors, restaurants, cleaning businesses, hairdressers, landscapers, electricians…
Wait, the better question might be are there any business types don’t need liability insurance?
If you’re a business in Ontario, you need liability insurance.
Even if liability insurance is not required by law for your business (as it is for electricians) and even if liability insurance is not a major factor in a potential customers decision to hire you or not (as is the case for most contractors), liability insurance is one of the best ways you can protect your business, ensure its long term success and get better sleep at night.
HOW MUCH DOES LIABILITY INSURANCE COST IN ONTARIO?
The cost of liability insurance depends on the type of business, how much business you conduct, where you’re located, how long you’ve been running the business and what previous insurance claims you have made.
Most insurance providers will offer a free commercial liability insurance quote so we recommend you speak with several different insurance companies to see which feels like the best fit for you.
Erie Mutual Insurance proudly serves the commercial insurance, farm insurance, home insurance and auto insurance needs of members throughout Southern Ontario including Haldimand, Niagara and Hamilton.
Please don’t hesitate to contact us with any questions you may have about this or any other topic related to your insurance.
