How to Insure Your Toronto Startup Business

How to Insure Your Toronto Startup Business

February 8, 2024 / 5 mins read

You’re busy growing your Toronto startup business. To protect your investment, you will need a customized business insurance package that’s specific to the needs of your startup.

You may hear it called startup insurance. Startup insurance helps protect you as a Toronto entrepreneur whether you are facing a negligence claim, cyber attack, product recall, or mismanaged funds.

Wherever your Toronto startup business is located, or if it’s in Greater Toronto Area (GTA), or anywhere in Ontario, your Western Financial Group business insurance expert will make sure that your business insurance is customized to your needs at the right value for you.

Toronto startup business insurance is recommended for:

  • AI startups
  • Ecommerce startups
  • Fintech startups
  • Software startups
  • Mobile app startups
  • Edtech startups
  • Food/Beverage startups

What is startup insurance?

Startup insurance is a package of insurance coverages that protects you as an entrepreneur from claims such as third-party (customer or supplier) bodily injury and property damage, and professional negligence. It also helps provide financial support if your office/warehouse (commercial property) and business contents are damaged, destroyed, or stolen.

With a startup, you are disrupting or creating a new market. And there are generally risks involved in starting and growing your Toronto startup.

With startup business insurance, you will be able to tell clients that you are insured and you have mitigated risks that your startup could face.

How can startup insurance help your Toronto business?

1. You provide new software to a client who says it does not perform as promised and has resulted in a financial loss for him. The client then sues you. Professional liability insurance (also called errors and omissions insurance) can help cover legal defence fees and any financial settlement awarded to your client.

2. A client visits your startup’s office slips on icy steps into the building and then sues you. Commercial general liability insurance can help cover your legal expenses and any awards ordered by a court, whether you win or lose, and uninsured medical expenses.

3. Your computer system suffers a cyber attack and confidential client data is stolen. Cyber liability insurance coverage can help pay for repairing your computer system. Without cyber insurance, you will have to pay out of your own pocket for the cost of restoring your system. You may also be liable for damages to third parties whose information has been stolen and you may have to pay for notification expenses to inform customers affected by a breach.

What can be included in startup insurance?

Commercial general liability (CGL) insurance: CGL helps provide financial support for your Toronto startup should a customer or supplier get injured or their property be damaged at your place of business.

Commercial general liability insurance helps cover your legal expenses and any awards ordered by a court, whether you win or lose.

Commercial property insurance: Commercial property insurance covers your Toronto startup’s business property, contents, electronics, and inventory if damaged or destroyed by a natural disaster or extreme weather, or by fire, flood, theft, and vandalism.

Professional liability insurance: You will also hear this type of insurance called errors and omissions (E&O) insurance. It’s essential for your Toronto startup if you provide professional or consulting services to your clients.

It protects you from allegations of negligence, product failure, failing to deliver a service, or damage or loss to a client resulting from your services.

Product liability insurance: Product liability insurance helps protect your startup from liability should you sell a defective product that causes harm. This type of insurance is designed to protect your Toronto startup from the financial consequences of a product-related claim.

Cyber insurance: This type of insurance helps protect your business if you electronically store confidential data about your clients and your Toronto startup business.

Legal expense insurance: Legal protection insurance gives you access to legal advice, assistance, and coverage for legal disputes. As a Toronto entrepreneur, you will be able to get legal advice from an experienced lawyer on a set of common business topics. Legal expense insurance also helps cover the costs of a lawyer to pursue legal action.

Directors and Officers (D&O) Insurance: Directors and officers (D&O) liability insurance protect your startup’s board of directors from claims of negligence, violation of federal or provincial laws, of breach of fiduciary duties.

If you are looking for investors and plan to raise money through venture capitalists, you can expect that you will be required to have directors and officers insurance.

Business interruption insurance: This coverage supports you when your Toronto startup can’t operate due to a covered loss.

There are a number of losses that can force your business to shut down. Some examples include:

  • Damage to your equipment from fire or vandalism
  • A major reduction in revenue due to a client/supplier facing losses of their own
  • A disruption in your supply chain

Business interruption insurance can help with expenses such as:

  • Payroll
  • Rent
  • Utilities
  • Property taxes
  • Alarm monitoring
  • Relocation of your business

Business interruption insurance can mean the difference between recovering from a loss and your Toronto startup business closing permanently.

Here’s a business insurance checklist:

  • Do you have the best Toronto business insurance rate that suits your work?
  • Do you have the right amount for your deductible and regularly review it to make sure it’s the right amount for you?
  • Are you or your employees using personal vehicles for work?

What do I do if I need to make an insurance claim?

  • Contact your broker immediately after any business-related mishap at your Toronto business. Waiting to file a claim can confuse insurers about the severity of the damages to your business.
  • Know your policy so that when you contact your broker you are familiar with what will be covered or not.
  • If there’s any damage, document it. Take photos right away and write down what happened.
  • Do not throw away damaged goods after taking photos. Keep the physical evidence so that your adjustor can see it.
  • Do not invite lawsuits. Don’t say anything that could be used against you, especially if you aren’t sure what happened.
  • Be honest about what your damaged property is worth. Damaged commercial property is generally valued according to its actual cash value or replacement value.

Western Financial Group has licensed BUSINESS INSURANCE EXPERTS to get you the right startup insurance for your Toronto business. Our experts are available now to help you navigate the business insurance journey to protect your Toronto startup.

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