The number of small businesses in Alberta increased by 12% from 2012 to 2017, which reflects this province’s entrepreneurial spirit. Liability risks for small businesses in Alberta are often overlooked, however. Liability risk is the financial and legal costs brought about by litigation from clients, third-party vendors, or employees against the business. These can include:
- Staff complaints.
- Employee work-related injury.
- Libel or slander claims.
- Damage incurred by a product malfunction or service failure.
- Cybersecurity breach.
- Additional risks based on the industry.
Below, we’ll break down these 6 liability risks for small businesses in Alberta and what business insurance options you have.
1. Staff Complaints
This is any litigation brought against you from employees. This can include harassment, unjust termination of employment, a breach of contract, or discrimination in the place of work. Hopefully, with proper protocols following the laws set by the Alberta Government, you won’t have to worry about this. But there is always a risk with employees that you could be brought to court. Whether you win or lose, this could be a serious financial hardship for a small business. Talk to your broker about coverage for this type of liability risk once you’ve hired an employee.
2. Employee Injury Related to Work
This one is relatively straightforward. Unfortunately, injuries can be unexpected and can occur virtually anywhere. Any injury that occurs during work hours, at work, or carrying out a work-related task counts. A commercial general liability insurance policy covers you for any lawsuits deriving from injury at your place of work (for both employees and clients). You may require specialized coverage if you have work sites or work in certain industries.
3. Libel or Slander
Libel and slander are false statements used to harm or otherwise degrade an individual or organization’s reputation. This risk refers to any claims your business might make against other organizations or individuals or claims made against your business.
4. Damage Incurred by Product Malfunction or Service Failure
Your business will either sell products or provide a service. Even if you’re not the manufacturer of a product, if it harms someone, you could be held liable. Product general liability insurance protects your business if a product causes damage or harm.
If you provide a service, you could be held accountable for negligence, bad advice, or a failure to perform the service. You will need specialized insurance known as professional liability or errors and omissions insurance which will cover you in this case.
Cybersecurity is a huge vulnerability and every business is at risk for a data breach. Your business may be held accountable for any theft, ransom, or other unauthorized access to client information. Your business is responsible for protecting it – and you can be sued if you fail to do so or follow the proper post-breach protocols. Insurance companies are now offering cybersecurity insurance to help reduce the financial strain of a data breach. This includes damages, fines, costs of extortion, business interruption, and expenses related to restoration.
6. Additional Risks
Depending on your business and industry, there can be additional risks that apply to you. These would be specialized to a business’ products, services, and working conditions, including what hours your service is available. Talk to your broker for more info on what coverage is available for your business.
Liability Coverage Options for Small Businesses in Alberta
Liability insurance can be purchased separately or incorporated into a package. The cost will depend on your business’ risks, such as what products or services you offer, where you’re located, the training you give employees, the hours you operate, and so on. Talk to your broker about your options. Here are three of the most common liability insurance types:
- Professional liability: Also known as errors and omissions insurance. This is for people who work in service fields, such as accountants, medical professionals, and consulting. It provides coverage for litigation arising from bad advice, misinterpreted advice, negligence, and failure to provide services. This is often required by clients.
- General liability: This policy is not specific to any type of industry and provides rudimentary protection if your business is sued. It will cover things like injuries and damages to employees and clients on your premises.
- Product liability: If your business sells products, this insurance will cover the costs if you are sued for injury or damage by a customer due to your product.
- Cyber liability: Provides coverage in the event of a data breach or cybersecurity incident.
Every small business in Alberta has liability risks. This type of insurance protects you and will help keep your business afloat if the worst should happen. Financial security for your business is key – talk to your broker for more info on how to protect yourself.