Why Do I Need Insurance For My IT Business?

Common Questions Attached To IT Business Insurance Policies

More and more Canadians these days are venturing out on their own and opening small businesses. Maybe it is COVID that’s forced you out of work and you are looking for a fresh new start. Maybe you are looking to start completely over. Perhaps, you are just looking to open a small venture to supplement your income until your normal business or job picks back up. Whatever the situation is, there are a number of viable reasons that one might start a small Canadian business today. Despite what many might believe and even with COVID out there looming, there are certain markets that are still fruitful.

Just take e-commerce and online sales. Given the fact that a lot of individuals are afraid to leave their homes these days, shopping online has become more pertinent than ever. It was already a major deal with a steadily growing revenue stream, but now, it’s catapulted. Regardless of the small Canadian business you choose to open, you must safeguard that business if you don’t want to ruin yourself and potentially your family financially. While there are a number of risks out there and a number of ways to safeguard your new business, one of the best to start with are business insurance.

Why Is Business Insurance Necessary For The Small Business Owner?

The answer to this one is somewhat simple and complicated. The reason for this is because it is a multiple part answer. For instance, given that you are located in Canada, there are certain policies that will be required by Canadian law. There are other policies that will safeguard your business against potential risks that you’ll face every day. There are even certain policies that will help your small Canadian business stay afloat when your property is damaged or there are major business interruptions. Maybe you are facing a lawsuit or trying to settle one.

What Makes IT Business Insurance So Important?

This one is probably pretty obvious by now. IT business insurance policies are so important because they’ll essentially protect you, your business, your employees, and your family in the event that something goes wrong. Just imagine if a client sues your tech firm because of a slight oversight. Maybe the oversight didn’t hurt anyone or anything. Maybe the oversight was caught before it caused problems. Perhaps, it led to millions of dollars in losses for your client. Whatever the situation, all of these instances could result in long, drawn-out lawsuits. That’s right, just the fact that you overlooked something simple could result in a lawsuit.

Heck, you wouldn’t even have to necessarily overlook anything for a lawsuit to occur. A customer could just claim that you did and file a suit anyways. Maybe there is a security breach after you install a new network for a client. Perhaps an employee steals information and passes it on to the highest bidder. There are a number of situations where your company could end up costing your client financially. And, there are situations where business insurance policies are important.

This is because all of these situations could lead to potential lawsuits. Whether they are founded or not, once they hit the Canadian court system they are legal and could result in thousands of dollars in fines along the way. And, this is not to even mention if you lose the suit. This might end up resulting in millions. Do you want to know what’s even scarier? This doesn’t even begin to touch all the potential risks that your business is exposed to on a daily basis. There are tons of others!

When Do You Need Business Insurance Policies?

To be completely honest, you’re going to need certain policies in place before you even open your doors. Some policies just aren’t optional. Going back to the tech industry, there might be specific types of business insurance that are required to comply with Canadian law. That being said, take a look at some other times when policies might need to be enacted.

Required By Law

With a bit of research, you’ll find that most Canadian provinces require tech companies with employees to carry workers’ compensation insurance. If you’re going to take on employees, you’ll need to make sure that each of them is covered with a specific policy. If those employees are going to be driving company vehicles to and from the job, you’ll need to make sure those vehicles are covered by commercial auto insurance.

These policies will not only cover your company in the event of an accident, but they’ll cover a wide range of damages and medical expenses. Expenses that might prevent a lawsuit. However, if the case does get as far as the courts, these types of coverage will also pay for most of the court-related costs. So as you can see, even though the policies are required by law they still come in handy while providing the relief and protection that you need to freely operate.

Required By Client Contracts

Sometimes working with certain individuals, businesses, or corporations might require you to take out specific policies. Some clients might request that you carry errors and omissions insurance before assigning you a contract. Some clients might require you to take out what is known as fidelity bonds before hiring your company. Regardless, these are policies that will protect both you and your client, so you really can’t go wrong by spending a little extra on them. Heck, it would be a good idea to have such policies in place before customers even request them.

Required By Rental Agreements

Not all, but most of today’s small businesses will have a physical brick and mortar shop. While these shops are great for advertising, establishing your brand, getting your name out there, and hosting clients, they do come along with expenses and risks. First off, it is likely that you won’t be able to buy a shop of your own when starting out. This means that you’ll have to rent. There is nothing wrong with this, but the landlord can place certain requirements in the contract before allotting you the space.

For instance, he or she might require you to take out a general liability policy. This is a type of policy that covers third-party property damage and compensation for customers that are injured on your property. Luckily, there are ways that you can save money with this policy. When shopping for insurance with providers like ProfessionalsCoverage consider bundling this policy with commercial property insurance. General liability insurance bundled with commercial property insurance will not only offer more protection, but it’ll lower your overall costs.

How Can Small Businesses Benefit From Insurance Policies?

Given that you are actually having to pay out large sums of money for these coverage plans, it might be hard to see how you can benefit from them. Well, that isn’t the case at all. In fact, there are a number of ways that small Canadian businesses benefit from just having the policies in place. So, you can rest well knowing that your money is going for a good cause.

Lawsuit Protection – This one is probably pretty obvious. If you’ve been paying attention, you know that all the above policies are designed to protect against lawsuits. Even if you aren’t at fault a customer can initiate a lawsuit that will eventually lead to thousands of dollars in lost revenue. With the right policies in place, you don’t have to lose this revenue.

Protection From Data Breaches – As a business owner, you’ll always have customer information on hand. Financial and personal information. Whether a scammer, hacker, or employee gets a hold of this information, they can use it to their advantage. When situations like this happen, your clients are going to come after you, seeking repercussions for their lost wages.

Protection During Interruptions – Canadian businesses today are also at risk of business interruptions. Whether it be a fire or a tornado, there are tons of natural disasters that could cause you to close shop for months or weeks at a time. Could you afford to lose potential revenue for this time period? Likely not, given that you are just starting out. And, you won’t have to with the right policies in place. Certain policies will go as far as to move you to a new building while yours is being repaired. Some will pay for lost wages and revenue. Whatever the situation, you can see where these policies are pertinent.

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If your specializing is not mentioned below, have no worries. Our insurance markets can provide liability coverage for the majority of information technology related businesses.