Business insurance protects your company from financial losses due to lawsuits, property damage, employee injuries, and other risks. In Canada, some coverage is legally required, and other types are required in practice by landlords, clients and contracts. This guide covers the main policy types, what drives their cost, workers’ compensation by province, and the options for home-based businesses and freelancers. Personal coverage (travel, pet, umbrella liability) is listed in the travel, pet and other insurance hub.
Types of business insurance
Essential coverage
| Insurance Type | What It Covers | Who Needs It |
|---|---|---|
| Commercial General Liability (CGL) | Bodily injury or property damage to third parties, advertising injury | Every business |
| Professional Liability (E&O) | Claims of negligence, mistakes, or failure to deliver services | Service-based businesses, consultants, professionals |
| Commercial Property | Building, equipment, inventory, furniture damage/loss | Businesses with physical assets |
| Workers’ Compensation | Employee workplace injuries and illnesses | Mandatory if you have employees (most provinces) |
| Commercial Auto | Business-owned or business-used vehicles | Businesses with vehicles |
Additional coverage
| Insurance Type | What It Covers | Who Should Consider It |
|---|---|---|
| Cyber Liability | Data breaches, ransomware, privacy violations | Any business handling customer data |
| Business Interruption | Lost income when you cannot operate (fire, flood, etc.) | Businesses dependent on physical location |
| Product Liability | Harm caused by products you manufacture or sell | Manufacturers, retailers, importers |
| Directors & Officers (D&O) | Claims against company directors for management decisions | Corporations with a board |
| Key Person | Loss of a critical employee or owner | Small businesses that depend on one or two people |
| Commercial Umbrella | Additional liability coverage beyond other policy limits | High-revenue or high-risk businesses |
A commercial umbrella is separate from a personal policy: personal umbrella insurance excludes business activities, so a home-based business can’t rely on it.
How much business insurance costs
Business insurance premiums vary too widely by industry and business size for a single typical figure to be useful. A home-based consultant with no employees and a restaurant or construction contractor sit at opposite ends of the range, and professional liability costs most in professions where one mistake can cause a large loss. The factors below set the price; a commercial broker or direct quotes from several insurers give the actual cost for a specific business.
Factors affecting your premiums
| Factor | Impact |
|---|---|
| Industry risk level | Higher risk = higher premiums |
| Annual revenue | Higher revenue = higher premiums |
| Number of employees | More employees = higher premiums |
| Claims history | Previous claims increase rates |
| Location | Urban locations often cost more |
| Coverage limits | Higher limits = higher premiums |
| Deductible | Higher deductible = lower premiums (how deductibles work) |
Workers’ compensation in Canada
Workers’ compensation is administered provincially and is mandatory for most employers with workers. Each province decides which industries must be covered; in Ontario, for example, the Workplace Safety and Insurance Act lists the industries that must have WSIB coverage, and a business outside them can apply for coverage voluntarily.
| Province | Administrator |
|---|---|
| ON | WSIB |
| BC | WorkSafeBC |
| AB | WCB Alberta |
| SK | Saskatchewan WCB |
| MB | WCB Manitoba |
| QC | CNESST |
| NB | WorkSafeNB |
| NS | WCB Nova Scotia |
| PE | WCB PEI |
| NL | WorkplaceNL |
Premiums are based on your industry classification and payroll, so a higher-risk industry pays a higher rate per $100 of payroll.
Insurance for home-based businesses
If you run a business from home, you must tell your home insurer. A homeowner’s policy offers only a small coverage limit for the tools and equipment a business uses, and it doesn’t cover professional liability. Options include:
| Option | What it covers |
|---|---|
| Home-based business endorsement | Adds limited business coverage to your home insurance policy |
| In-home business policy | Separate policy for business equipment, liability and loss of income |
| Standalone commercial policy | Full commercial coverage separate from home insurance |
An endorsement adds only limited business coverage. Once clients visit your home, you store products there, or the business grows, the exposure can outgrow it and a separate business policy may fit better.
Insurance for self-employed and freelancers
| Coverage | Why it matters |
|---|---|
| Professional liability | A client claims your work caused them a loss |
| General liability | Someone gets hurt at your workspace or by your product |
| Cyber liability | You handle client data that could be breached |
| Business interruption | You cannot operate after an insured loss such as a fire |
| Disability insurance | You cannot work due to injury or illness |
Disability coverage for the self-employed is covered in the disability insurance guide.
Many freelancers start with a policy that combines general and professional liability, and some insurers package several coverages for small businesses into one policy.
How to buy business insurance
- Assess your risks. What could go wrong, and what would it cost?
- Check legal and professional requirements. Workers’ compensation, auto insurance for business vehicles, and any insurance your professional regulator requires.
- Check contract requirements. Clients and landlords may require specific coverage.
- Get several quotes. Commercial brokers quote multiple insurers at once.
- Review policy details. Exclusions, limits, deductibles and the claims process.
- Review annually. Coverage needs change as the business grows.
Using a broker vs buying direct
Commercial coverage is where a broker’s role is largest, because policies are built around the industry’s specific risks and brokers can find coverage an owner may not know to ask for. Simple, low-risk businesses can also buy basic policies directly or through online marketplaces. The general trade-offs, including how brokers are paid, are in insurance broker vs buying direct.