What Happens to My Insurance When I Sell My Business?

Selling Your Toronto Business? What Happens to Your Insurance?

February 27, 2025 / 5 mins read

When you’re selling or transferring your Toronto business, you’ll need to deal with what happens to your commercial insurance.

It's important to read your business insurance policy to understand how selling your Toronto business can affect your commercial insurance policy.

Wherever your small business is located in Toronto, the Greater Toronto Area (GTA), or elsewhere in Ontario, your Western Financial Group business insurance broker will get you commercial coverage that uniquely protects what you do.

Western is a trusted, national insurance brokerage that has partnered with Canada’s top insurance companies to provide commercial insurance. We work with our insurance partners to find the best business coverage for your needs.

We make the process easy by getting insurance quotes for you to choose from and giving you policy coverage options that suit your Toronto business’s specific needs.

You’re selling your Toronto business. What happens to your business insurance?

What to know about commercial insurance when selling your Toronto business:

Contact your insurance provider

Don’t forget to contact your business insurance provider about the sale of your Toronto business and discuss whether the policy can be transferred to the new owner.

You will likely need to provide the sales agreement and the new owner's information to officially transfer a commercial business insurance policy.

What happens to my business insurance policy when I sell?

Don’t assume that your business insurance can be automatically transferred to the new owner. Some commercial insurance policies will state that the policy can’t be transferred to another person without the written consent of the insurance company.

If the policy is to be transferred, you would need to get permission of the insurance company to continue the policy.

When do I need to transfer the business insurance policy to the new owner?

If your business insurance policy allows you to transfer your commercial insurance to the new owner, it’s important to get it coordinated with the closure of the sale so that coverage can continue.

You can transfer the business insurance to the new owner when the sale of your Toronto business is finalized and you have received written consent from your insurance provider.

Other reasons a business insurance policy might need to be transferred:

  • Death of the owner
  • Purchase of your company’s name

What if I can’t transfer my business insurance?

Your insurance company might decide they’re not comfortable underwriting the new owner of your Toronto business.

Or you might not need to transfer your policy if you’re near the end of your business insurance policy term.

Then the new owner can apply for a new business insurance policy.

Be sure to talk to your insurance provider about different scenarios and how your commercial insurance policy would be affected.

What is ‘tail coverage’ and do I need it if I am selling my Toronto business?

Tail coverage is an extension of your business insurance that you can add as a rider, also called an endorsement, to cover claims made against you that were only reported after your policy expired or was cancelled.

Tail coverage is usually purchased when you sell your business, retire, or terminate your policy.

Examples of businesses that may require tail coverage due to a claim that may be filed after their business policy has expired:

  • Doctors, dentists, healthcare professionals
  • Accountants
  • Business consultants
  • Lawyers and legal firms
  • Architects
  • Engineers,
  • Real estate agents
  • IT professionals
  • Marketing professionals
  • Non-profit organizations
  • Any business or professional providing advice

When should you update your business insurance policy?

It’s important to revise your business insurance as your Toronto business changes. Have you added employees or locations, or have you downsized?

Have you renovated your location or upgraded your IT system and workspaces?

You should also contact your business insurance expert to update your commercial insurance coverage if your business no longer offers the services or products covered by your existing policy. Has your business changed its name?

Insurance recommended for Toronto small businesses

Commercial vehicle insurance is also needed:

When you or your employees are on the road for work, commercial vehicle insurance may cover your vehicles in the case of an accident. Your personal vehicle insurance will not cover you in the case of an accident if the work is related to your Toronto small business.

What do I do if I have a claim against my Toronto small business?

  • Contact your broker immediately after any business-related mishap. 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.
  • Document the damage. 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.

Here’s an 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?

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

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