Frequently Asked Insurance Questions Answered By Our Merit Brokers

People understand that insurance is mandatory in Canada, but often don’t always understand the details of their policies. Some common confusion is around what is covered, why is it useful, and specifics that may leave them exposed in the event of an unforeseen incident.

To make life easier, our Merit Insurance brokers have compiled their top Frequently Asked Insurance Questions from their clients. Everything from business insurance, cyber, to even a home-based or online business- we’ve got you covered!

1. Does my online business need insurance?

Yes, even virtual businesses require insurance coverage. There are significant differences when it comes to virtual business compared to brick-and-mortar retail outlets in terms of insurance.

Your online business isn’t just a website. You also use social media, email, and other digital platforms to operate your company, leaving you open to potential risks.

Business insurance can help if:

A virtual business includes running a website, social media, or other digital platforms that can leave your company vulnerable. A hacker can get into your payment system and take a customer’s credit card information, a photographer can sue you for copyright infringement for use of photos or other breaches of contract. Many start-ups online do not think they need insurance because of the lack of physical liability, but leaving your online business exposed can result in costly claims.

Commercial general liability, professional liability, cyber insurance, and many more coverages are available for small business and virtual business owners. Talk to your Merit broker on the right type of coverage for your digital-based business.

2. What does my cyber insurance cover?

Cyber insurance goes beyond repairing databases, strengthening security processes, and replacing lost hardware. This coverage protects businesses against liability to others and covers costs for expenses related to a data breach. This can also include costs associated with legal counsel and defense, a digital forensics team, notification costs, crisis communications, setting up a call center, and credit monitoring for those affected by a hack.

Since the start of the pandemic, cyber-attacks are up 400% in Canada alone. For businesses large or small, having cyber coverage in place is essential.

3. What exclusions should I watch for in commercial property insurance?

Standard commercial property insurance protects commercial property from such perils as fire, theft, and natural disaster. However, there are some exclusions. Most commercial property policy exclusions apply to risks that fall into one of the categories described below:

• Catastrophic events like war, military actions, floods, and earthquakes are excluded from standard policy wordings. However, some catastrophic events can be insured by specialized coverage.
• Covered by another policy such as boiler and machinery. The fact that this is covered under another form of insurance, therefore, excludes it from standard property coverage.
• Maintenance issues developing from the wear and tear of commercial property are not covered as it is the owner’s responsibility to maintain. Risks that can be controlled through regular maintenance are rust, corrosion, and pest infestations are not included.

4. Is landlords’ insurance worth my money?

Owning a rental property comes with risks that you don’t have when you occupy your own property. Imagine if a tenant of yours gets hurt – you could be facing legal action, and if you’re sued, home insurance may not cover you.

In addition, if a tenant can’t stay in the property due to an insured event, such as fire or flood, a landlord policy can cover the rehousing cost. It can even cover the loss of rent for the time when your tenants can’t live in the property.

5. Do I Need To Insure My ‘Side Hustle’?

It’s a common misconception, but one that can be exorbitant – many entrepreneurs who operate a ‘side hustle’ from their home think their homeowners’ or renters’ policy will extend to their business. But this is not the case.

Check your homeowner’s insurance policy wordings. It’s more than likely your daily business activities are not covered under it. Even if you run your business out of your home, your home insurance won’t cover things like business equipment or damage to a client’s property.

You can be sued for just about anything – even if you do everything right. A client or customer can sue you if they’re unhappy with your work. Even if the suit carries no weight, it’s costly to defend in terms of both time and money.

Example: As a digital marketer, you’ve been employed to increase sales, but your strategy is not as successful as hoped and sales to your client decrease. This client could make a claim for failure to deliver the services promised. This is a scenario where professional liability insurance could protect you against claims of negligence even if a mistake hasn’t been made.

Stuff happens that is out of your control. A lot of side hustles are sole proprietorships, which can leave your personal assets exposed in the event of a lawsuit. Since you own the company, if a client successfully sues you, they can take what you own including your savings, your car, and other valuables. The proper business insurance can protect you and the things you own so that you can focus on the hustle.