If you ask the ordinary person on the street what they know about insurance, they’ll probably answer by speaking about homeowner’s insurance, renter’s insurance, auto insurance, or life insurance. And that only makes sense. For the majority of the population, these are the types of insurance that personally affect them. However, there is another much less talked-about type of insurance that I think deserves some long-overdue attention  - business insurance.

As a person who has spent the vast majority of my career in the insurance industry, I’ve spent a great deal of time extolling the virtues of business insurance, and I always find myself making the same central point: it’s not a luxury, it’s a necessity. It’s the only way to be sure that your business is protected from financial ruin in case of unexpected events like lawsuits or other more serious business interruptions, such as damage incurred from natural disasters.

What Does Business Insurance Cover?

Business insurance is a broad term, and what it covers depends on the type of policy you buy. In general, it’s designed to protect a business from major financial losses due to unexpected events. For example, property insurance can cover damage to your physical location from fire, storms, or vandalism. Liability insurance helps cover the costs if your business is sued, whether it’s for something like a customer injury on your property or a lawsuit over your products or services.

The point is, business insurance helps cover the things you might not even think about until it’s too late—things like equipment breakdowns, data breaches, or even the sudden death of a key employee. The goal is to make sure your business can continue operating regardless, even when life throws unpleasant surprises your way.

Why is Business Insurance Essential?

One common misconception I’ve encountered is that many small business owners don’t think they need insurance, especially if they don’t have a physical storefront. But the truth is, no matter the size or nature of your operation, insurance is essential. Think about it this way: If you’re a consultant working from home and a client sues you for giving faulty advice, would you be able to cover the legal fees out of pocket? Probably not. That’s why professional liability insurance exists.

Business insurance provides peace of mind. It’s the safety net that lets you focus your valuable attention on running and growing your business, knowing that if something goes wrong, you won’t be on the hook for every last cent. In fact, without proper insurance, a single lawsuit or unanticipated major loss could mean the end of your business altogether.

The Different Types of Business Insurance You Might Need

There are several types of business insurance, and it’s important to know which ones apply to your company. General liability insurance is a must for most businesses—it covers things like bodily injuries and property damage. But if you’re in a specialized field, you might need professional liability insurance to cover mistakes or negligence in your work.

Then there’s business interruption insurance, which helps replace lost income if your business can’t operate due to an event like a fire or flood. Cyber insurance is also becoming increasingly important as more companies operate in the digital realm, as it helps protect against data breaches and cyber-attacks, which can be ruinous for businesses of any size.

But beyond all this, I can personally attest to the crucial importance of business insurance and how it came to the rescue of many of our clients at Acera Insurance. During the 2016 Alberta wildfires, my brokerage handled hundreds of claims from businesses that had suffered extensive damage from the blazes. We did our best to pitch in; we set up emergency response centers and worked tirelessly around the clock, releasing emergency funds to policyholders and helping in any other ways we possibly could.

Living and working through that tragic ordeal taught me many things. First and foremost, it reinforced how precious life is, and how lucky we all are to be walking this Earth and interacting with our friends and loved ones. After that, though, I started thinking about how the tragedy would’ve been compounded if the economy of the affected area had been harmed even more than it already had been by the fires. 

It’s important to keep in mind that approximately 40% of all structures in the city of Fort McMurray were destroyed. So, just think—what if almost half of the businesses closed up shop and never reopened? What if grocery stores and other essential services had shuttered permanently? It would have been devastating for the people living there. And doubtless, that would’ve been the case had it not been for the fact that their owners had the foresight to purchase business insurance.