Top Insurance to Protect Toronto Businesses Against Lawsuits

May 22, 2025 / 5 mins read

If your small business gets sued and you don’t have the right business liability insurance, the cost can be financially staggering to you as the owner.

A lawsuit against your Toronto business can not only cause financial loss, but reputational harm and operational disruption. Commercial general liability insurance, errors and omissions insurance, product liability insurance, and cyber liability insurance can financially protect your business when facing a lawsuit.

Western Financial Group, a 100% Canadian company, can help you navigate your business, car, home, and boat insurance during this period of economic uncertainty.

Wherever your small business is located in Toronto, the Greater Toronto Area (GTA), or elsewhere in Ontario, a 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 at the best rate for you.

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 at the right price for you.

Why is business liability insurance important?

Liability insurance can offer financial protection if your Toronto business is sued for unintentional harm to a third party (client, supplier, or member of the public). It typically helps cover legal fees or court-ordered settlements or awards.

It can mean the difference between staying open and closing your doors for good.

What are the top business liability insurance coverages needed?

Commercial general liability (CGL) insurance

CGL is the cornerstone of your business liability insurance. Without commercial general liability insurance, you will pay costs related to third-party (customer/supplier/member of the public) lawsuits as a result of injuries or damage to their property out of your own pocket. Can you afford that as a small business owner?

If you were sued, commercial general liability insurance would help cover the legal costs to defend the claim against your Toronto business in court, as well as costs to cover damages to compensate third parties whether you win or lose your case.

What kind of risks does commercial general liability insurance cover?

Injury to a third party who is not your employee
Damage to someone’s property
Damage to rented property
Medical bills if someone is injured
Legal costs and settlement costs of liability lawsuits filed against you
Liability lawsuits related to slander and libel

Here’s how CGL insurance can help your Toronto business: A customer is injured after they slip on a wet floor at your business. The customer decides to sue you. Commercial general liability insurance can help pay for your legal fees, court-ordered settlement, and medical bills.

Errors and omissions insurance

This type of business liability insurance is also known as professional liability insurance.

If you are faced with a lawsuit as a Toronto business owner, E & O insurance can help protect you against loss in the event of a lawsuit due to a negligent act, or an error or omission during the course of your services to a client.

In addition to claims of error, omission, or negligence, E and O can also protect against slander, libel, and breach of contract.

Some of the most common E & O situations that business owners can face include:

Projects that are not completed according to the contract with a client, such as being over budget
Work is not finished on time
Defects in your work

Toronto businesses providing professional advice or services for a fee usually need E & O insurance, including:

Consultants
Accountants
Architects
Lawyers
Real estate agents
IT professionals
Financial advisors
Wedding planners
Health professionals
Fitness trainers

Product liability insurance

Product liability typically covers situations where a customer purchases a product and it causes bodily injury or property damage and you then get sued.

Product liability insurance is recommended for anyone who sells, manufactures, or distributes a product, including food products. It’s also recommended for online retailers, in addition to retailers with store locations.

As a Toronto small business owner, you could be found responsible for the damages if the source of the issue can be traced back to your business.

Product liability insurance will help protect your business from legal costs if you’re found responsible for a product causing bodily injury or property damage to a third party.

What product liability insurance covers:

Design defects: There’s something wrong with the product’s design.
Manufacturing defects: Something went wrong during manufacturing.
Marketing missteps: A mistake in marketing materials, such as improper labels.
Insufficient warnings: The product doesn’t include sufficient warning/information about potential harm.

Cyber liability insurance

Who needs cyber liability insurance?

You use computer/cloud systems to store your data.
You provide software or hardware services
You use point-of-sale systems for payments.
You store customer/patient data, such as financial, medical or credit card data.

What does cyber insurance cover?

Cyber liability insurance helps provide your Toronto small business with financial support if it suffers damage or loss because of a data breach or cyberattack, or if clients sue you as a result of the breach or attack.

What costs can cyber insurance help cover?

Repair and restoration of damaged software systems
Forensic investigations
Legal advice and expenses
Crisis management services
A team to help respond to your affected customers
Cyber extortion
Regulatory expenses and fines
Coverage for losses sustained due to a system outage resulting from a cyberattack.

How much will these liability insurance coverages cost my Toronto business?

The cost will depend on your business and the services it provides as well as your budget. You’ll need to have a detailed conversation with your insurance broker about the coverage you need.

Other factors that will determine the price include:

Number of employees
Location
Annual revenue
Any past claims

You should also consider business interruption insurance to protect your Toronto business

This coverage supports you when your Toronto small business 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

Other insurance for Toronto small businesses:

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

Why Western?

100% Canadian!

Get the best business insurance in Toronto

We’ll help you save money with competitive insurance quotes

Serving Canadians for over 100 years.

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