It’s a call you never want to receive in the middle of the night.
There’s been a fire in your restaurant. You arrive to find significant damage to the kitchen and the space where you serve customers completely gutted. The restaurant itself can be saved. But the smoke damage means you’ll have to pause serving customers for at least three months, not to mention rebuild your kitchen from the ground up.
With your restaurant out of commission, the survival of the whole business is at risk. Your community rallies around you, but there’s a growing mound of bills you need to pay.
Whether or not you have the correct insurance in place to cover this interruption, could be the difference between suspending operations temporarily while you make repairs so you can re-open—or permanently close your restaurant.
40% of small business owners surveyed lack insurance
One in five small business owners in Canada say their biggest financial liability is having their business interrupted, according to a new TD Insurance survey conducted by Maru Public Opinion. But 40% also said they do not have business insurance coverage that could help protect them against financial loss should their business be shut-down due to a covered event.
The survey revealed what could be a concerning knowledge gap among Canadian business owners around the purpose and value of insurance.
The owners surveyed were able to list their top liability concerns as:
- Business interruption, which could be a fire at a restaurant leading to suspension of business,
- Damage to property and contents, which could be a flood in a basement home office,
- Employee safety, which could be a contractor employee injured on a jobsite.
But of the business owners surveyed who said they had no insurance, almost 40% said they didn’t think they needed it.
“No one wants to imagine a delivery van crashing into the front window of their coffee shop, sewage backing up in their storeroom or a staff member burning themselves on a hot bakery oven,” said Tang Trang, Vice President, Product and Pricing, Small Business Insurance, TD Insurance.
“But you have to plan ahead in order to be in a position to protect yourself, your employees, and your business.”
The price of insurance premiums was another concern that came up in the survey results, with 36% of small businesses surveyed mentioning cost as a reason they don’t have insurance.
It’s not a surprising sentiment, given how inflation in Canada has increased the costs associated with running a business, Tang said.
"But even in the face of rising costs, an insurance policy is likely more affordable than paying out-of-pocket to fix a covered event such as fire damage, replacing spoiled food inventory because a freezer failed, or weathering a three-month closure with no revenue," said Tang.
If you're a business owner, here are four steps Tang said you can take to protect your business:
1. Review your policy regularly
Only 32% of the small business owners surveyed said they reviewed their existing policy regularly. As your business evolves, so do its unique needs. Therefore, it is important to be reviewing your insurance policy regularly and speak with a licensed insurance advisor if you have questions. A licensed insurance advisor can customize your coverage to make sure it’s still meeting your specific needs.
Your policy should align with your current business operations, and if they’ve grown or changed, you might be over or underinsured. By reviewing your policy regularly, you’ll make sure it covers new things like equipment purchases, new hires, new locations or new service offerings. You’ll also avoid paying for coverage you don’t need because it’s no longer relevant.
2. Foster workplace safety
At work, put safety first—always. Fewer accidents in your workplace means fewer claims and ideally, more affordable business insurance premiums. Run mandatory safety trainings and inspections, install a security system, and make sure safety gear—like fire extinguishers and first aid kits—are always accessible.
3. Keep detailed records
Stay on top of documenting your business assets, operations, financial transactions, and expenses. When it’s time to make a claim, you can combine this documentation with a comprehensive record of any accidents, incidents and previous claims, which will speed up the claims process and ensure you receive a fair payout.
4. Look into bundling your insurance
If you combine your commercial property and liability insurance with your commercial auto insurance—all under the same provider—you might be able to get a discount. It’s also a lot simpler and more straightforward when it’s time to renew your policies.