From Susan Ward,
Your Guide to Small Business: Canada.
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Do you have the business insurance you need?

For want of a nail, the shoe was lost. When we're talking about your business, losing the shoe can be serious indeed.

Think of business insurance as the nail; as in the old saw, it can help you hold onto what's really important. You personally cannot control or eliminate every potential risk that threatens your livelihood. Business insurance can provide the protection against these risks... if you carry the right kinds of business insurance for your small business.

Unfortunately, insuring your business is not as simple as insuring your car. Because your business is unique, you'll need to design a package of insurance that meets your business needs and provides the level of protection you're comfortable with. Your first decision is to decide which types of insurance your business needs.

This three part article outlines the types of business insurance that small businesses might need, including propery insurance, professional liability insurance, disability insurance, and business interruption insurance.

Two types of business insurance that all businesses need are property and liability insurance.

Property insurance protects the assets your business owns, including the building and equipment, from destruction or damage. Even if you run a home-based business and have home insurance, you'll need to protect your business assets with separate contents insurance; your home owner's policy will not cover business equipment. (See my article "Home-Based Business Insurance" for more information, as well as tips for saving money on the cost of home business insurance.)

Contents insurance protects your business equipment from perils such as fire, flood, or theft. To determine how much property or contents insurance you'll need, create an itemized list of your business' assets and their individual dollar values. Then decide which assets you actually want to insure and for what value, which will determine the insurance premium.

In some cases, you may decide against insuring a particular asset, because it just doesn't warrant the cost of the premium. In other cases, the premium may be well worth paying. Ask yourself, if this equipment, such as a computer, was stolen, would I be able to afford to replace it? If the answer is no, you should insure it.

What other types of business insurance do small businesses need? Definitely liability insurance, no matter how small the business, and employee insurance if your company has employees. These two types of business insurance are discussed on the next page...