6 Liability Risks for Small Businesses in Alberta

Portrait of a happy waiter opening on the doors at a cafe and smiling. He's not worried about the liability risks of a small business because he has commercial general liability insurance.

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:

  1. Staff complaints.
  2. Employee work-related injury.
  3. Libel or slander claims.
  4. Damage incurred by a product malfunction or service failure.
  5. Cybersecurity breach.
  6. 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.

5. Cybersecurity

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.

Commercial Vehicle Insurance for Small Businesses Explained

Smiling male sitting behind the wheel of his car. He is holding out a cardboard box with food towards the passenger window.

Commercial Vehicle Insurance for Small Businesses Explained

One of the most common questions our brokers get is “Do I need commercial vehicle insurance for my small business?” Unfortunately, there is a lot of misconceptions about what is covered by your personal car insurance. What’s worse, is if you fail to notify your insurance company and do not have the proper insurance policy in place, your claims could be denied. But have no fear, commercial vehicle insurance for small businesses will be explained in this article.

How do I know if I need commercial vehicle insurance for a small business?

If you’re only using your vehicle for commuting to and from your place of work, you don’t have to worry about getting commercial vehicle insurance for small businesses. This changes, however, if you’re doing one of the following actions:

  • Getting paid for transporting passengers
  • Driving to work sites or to regularly visit clients
  • Regularly transporting employees
  • Carrying of work-related materials
  • Making work-related deliveries
  • Having work-related tools or equipment installed on your vehicle
  • Allowing employees to drive your vehicle
  • If your vehicle is owned/leased by a corporation, partnership, or registered by a business

Keep in mind that this isn’t a complete list. You should talk to your broker about how you use your vehicle for full details on whether or not you need commercial vehicle insurance for your small business. However, if you use your personal vehicle for any of those tasks, you should purchase commercial vehicle insurance for small businesses. You must also have this specialized policy if your vehicle is registered in your company’s name. Remember, your general business insurance won’t cover vehicles.

What about my personal car insurance policy?

Generally, your personal car insurance policy will not extend to using your vehicle for commercial purposes. Additionally, you will not be covered for any job-related materials stored inside your vehicle or equipped to it. Why aren’t you covered? Generally, insuring a commercial vehicle for a small business has different levels of risk than a personal vehicle. You’re more likely to have valuable materials, you may drive more, and you may be at higher risk of being sued if you’re involved in an accident.

It’s important to remember that every insurance company is different. Yours will inform you as to what type of use is allowed. Talk to your broker for more details on what your car insurance policy covers and when it’s time to make the change to commercial vehicle insurance for small businesses.

Commercial Vehicle Insurance vs. Personal Car Insurance

Basically, the difference between the two boils down to how you use your vehicle and how much coverage is offered in the event of an accident or damages while using your vehicle for work purposes. If you use your vehicle for anything other than commuting, your personal car insurance will likely not offer any coverage. Even if it does, it may not be enough. Commercial vehicle insurance policies often have greater liability coverage as businesses often have higher liability risk. Your work-related materials and equipment may also be covered.

The Government of Alberta and the Government of Canada also have insurance requirements for certain commercial vehicles, which can include:

  • Cargo Insurance
  • Liability Insurance
  • Passenger Insurance

Even if you only have one vehicle for your small business, you still need to abide by the rules and protect the financial security of your small business.

What does commercial vehicle insurance cover for small businesses?

Commercial vehicle insurance varies depending on your insurer and your industry. There are many customized insurance policies that fit the needs of your small business. The three main areas of coverage include:

  • Liability – Covers third party injury and property damage.
  • Collision – Covers the repair or replacement of your vehicle if you’re involved in an accident.
  • Comprehensive – Covers the repair or replacement of your vehicle if you suffer a certain type of damage, such as storm, fire, or vandalism.

 

 

As always, check in with your independent insurance broker. They can help you evaluate your insurance needs and answer your questions.