Liability insurance refers to what is typically known in the insurance industry as General Liability Insurance or Commercial General Liability Insurance, but there are other types of business liability insurance as well. It is arguably the most important type of business insurance you can get. It protects you from a wide range of liabilities and incidents involving situations that may result in lawsuits and legal action.
Businesses are at a higher risk of liability than the average person, which is why the majority of Ontario-based businesses require liability insurance. It can help your business remain in business while you’re navigating the legal process, and save you money along the way.
Criminal Defense Fees
If the claim goes to court this covers lawyer fees
Whether settled out of court or court-ordered, this helps cover settlement costs
Courtroom Daily Allowance
Allows you to continue earning some income while on trial
There are several different types of liability insurance available to Ontario businesses. Depending on the type of business you have, where you operate your business and the clients you work with, you might require:
Protection from legal action is one of the greatest benefits of Ontario liability insurance. In the event of a lawsuit, it protects:
Your Employees. Ontario liability insurance helps keep businesses operating during the legal process and gives employees peace of mind that their work is protected.
Your Customers. Customers visiting your property, using your products or hiring your expertise want to ensure they're working with a respectable company that stands by their products and services. Liability insurance is expected in certain industries and offers validation that your business takes liability seriously.
Your work. Everybody makes mistakes, but that doesn’t mean it needs to end your career or bankrupt your business. Liability insurance can ensure you’re able to continue working, earning income and operating your business during the legal process.
Your Business. If someone is injured on your property, for example, the legal and medical fees accrued can be enough to put small-to-medium sized businesses out of business entirely. Liability insurance keeps your business safe and helps offset the costs of defense fees in many situations.
Liability insurance can be complicated as there are often overlapping terms for similar types of coverage. Professional liability insurance, errors and omissions (E&O) insurance and malpractice insurance are often used interchangeably, but there are some differences.
Professional liability insurance is a blanket term that covers a wide variety of professionals and businesses working in numerous industries. It is also referred to as errors and omissions insurance and malpractice insurance, which are different versions of the same thing.
Errors and Omissions (E&O) insurance protects contractors, consultants and similar professionals who may make errors in paperwork or upon consultation. This is wider than it sounds. If you’re an IT consultant, for example, it can help if you if a strategy you implement leaves your customer exposed. If you’re an independent contractor, it can help you if you’re sued for under-delivering on a service. These types of situations result in lawsuits all the time, which is why errors and omissions insurance is vital for anyone offering professional advice or services.
Malpractice insurance is a variation of E&O insurance for professionals working in legal, medical, financial and related industries. Many insurance companies still classify this as E&O, while others break it down further to medical malpractice insurance, for example. Regardless of its name, malpractice insurance has the same purpose as professional liability insurance: to protect you in the event you are taken to court over a service or consultation you provide.
Mistakes happen. If you work in a profession where your expertise has the potential to put others at risk, either through financial risk or bodily harm, you need professional liability insurance.
Examples of businesses and individuals requiring professional liability insurance include:
- IT professionals
- Event/wedding planners
There is more at stake than meets the eye, but you can protect your business with a liability insurance policy.
Answers to some of the most common questions we get about liability insurance in Ontario
It depends on a number of factors including the type of business you have. Best to consult with an insurance professional to talk about your specific needs.
In addition to the financial blow you might suffer in the event of a lawsuit, some clients may choose not do business with you without proof of liability insurance.
Not necessarily, but it comes highly recommended by the Canada Business Network, a division of the Government of Canada. Additionally, numerous contracts require proof of liability insurance in order to secure a business deal. Whether you're a lawyer or a landscaper, your clients want to know that the work you're doing is insured in the event something goes wrong.
Check out our commercial insurance page to learn more about the other types of business insurance that are available so you can ensure your business is fully protected.