COVID presents many businesses with a once in a lifetime crisis. With many provinces in Canada returning to lockdown protocols it is a difficult time for many businesses. With drastic reductions in revenue many business owners are looking for ways to save money. However, even during such an economic downturn, cancelling your business insurance coverages will lead to further problems.
A business should carefully consider their responsibilities before cancelling any coverages. In removing coverages, you could set off complications with other contracts you may have.
Here are Some Issues Cancelling Your Business Insurance Policies Could Trigger
Leasehold & Lessee Contracts
Some landlords require commercial tenants to maintain insurance on their unit. Typically, these tenant contracts have a clause requiring the tenant to have commercial insurance in place through the entire period of the lease contract.
There are important issues for those businesses who own their building. If you are carrying a mortgage the bank will have requirements that you maintain insurance the property suitable to the conditions laid out in a mortgage agreement. The bank could even require you to insure any contents you have as security.
Commercial Liability Protection
Liability insurance is a vital part of any good business insurance policy, because accidents happen all the time. Whether those accidents happen on-site or off-site, with a customer or with an employee, your company may be liable. Commercial General Liability protects you against claims of Bodily Injury, Property Damage and Personal Injury of a third party. Even if your business has reduced visitors someone could still get hurt. Subsequently, this could mean a lawsuit being brought against you. In some jurisdictions you are required to have Commercial General Liability in place if you have an employee. Same applies if you have a municipal business license. Likewise, it’s a requirement if you have a license to sell alcohol and/or a license to sell or operate lottery and video lottery terminals.
Contents & Equipment Protection
Businesses all have contents & equipment, and could still be damaged in a flood, fire, or theft event even when not in use. If a complete loss were to occur it would be very expensive to replace your damaged or lost assets without the protection of your insurance policy. Coverage on your contents, equipment and stock is generally known as Property Insurance. It is important to note that this type of coverage includes several specialized forms of insurance.
Having a Commercial Insurance Expert is a Must
These are just some of the reasons to maintain the many different coverages of commercial insurance. Above all, even during a downturn in business, your best insurance is having an insurance broker. He or she will take the time to review the current status of your operations. After that they can provide options and make recommendations. All this to help you reduce your insurance costs.
Accidents and Claims Are Unpredictable
It is very important for business owners to have business insurance protection in place. In short, you need to protect the assets that you have built over your business career. Not having insurance could result in you facing a lot of risk. In other words, unprotected risks could end up costing you your business and your retirement assets. Think about how you need to protect yourself from any type of claim. You’ll want to ensure that your business can get back to normal after an incident which forces it to close.
As expert insurance brokers and risk managers we recommend having the proper and correct insurance in place. Our goal is to protect businesses against potential losses.
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Thank you for reading.
LMI Canada Insurance (formerly Lackner McLennan and Erb and Erb) provides these informational articles to educate the public about insurance and investment related matters. Consequently, this article does not substitute for broker advice regarding your specific insurance or investment needs. For a comprehensive strategy to tackle what you, your family, or your business, may need we invite you to speak directly to a broker who can guide you through all the options available to you.