Understanding the main types of business insurance coverage

Whether you’re self-employed, run a small business or have an expanding empire, protecting your organization is essential. An unexpected event (such as theft, property damage or a lawsuit) can weaken even the most solid foundations. That’s where business insurance comes in.

By offering coverage tailored to your operations, different types of commercial insurance help ensure business continuity, safeguard your assets and protect your employees. Whether you’re in construction, healthcare services, retail or any other sector, there’s a solution for your unique needs.

In this article, we’ll walk you through the main types of business insurance available. Our goal: to help you better understand your options so you can choose the coverage that fits your reality. 

Although business coverage (also known as commercial insurance or business insurance) isn’t a universal requirement in Canada, you’ll probably need it if you want to sign a lease or get a bank loan, or if you work in certain professions (like healthcare or the law). And if you have commercial vehicles, you’ll definitely need commercial auto insurance.

But while it’s not mandatory, it’s an important financial safety net. Whether you’re in real estate, manufacturing or professional services, there’s a type of business insurance tailored to your specific needs. And despite common misconceptions, even if you run a small business, you can benefit from robust business protection that suits your budget.

There are several types of business insurance, designed to protect any business (from a small company to a well-established firm) against common risks. These protections fall under property, liability and personal insurance (health, life, disability), and they’re designed to cover infrastructure, financial losses and unforeseen events.

Commercial general liability insurance covers bodily injury or property damage caused to third parties in the course of your business activities. It also covers legal defence costs related to civil lawsuits.

• Who is it for? All businesses, particularly those in retail, food services, construction and real estate.

• Is it mandatory? No, but it’s highly recommended.

• Example: A customer slips on a wet floor in your store. Business liability insurance may cover their medical expenses and your legal fees.

Commercial property insurance covers tangible property and business assets: buildings, equipment, furniture, inventory and more.

• What’s covered: Damage caused by unforeseen events like fire, vandalism, theft or certain water damage events.

• Common exclusions: Natural disasters (depending on the policy), commercial vehicles.

• Key benefit: Protects the material assets your business relies on.

• Who is it for? Businesses with physical locations or critical equipment such as manufacturers, retailers and distributors.

• Is it mandatory? No, but it’s essential if your business has physical assets—that is, tangible assets (buildings, machinery, furniture, etc.) as opposed to intangible assets (patents, software, etc.).

• Example: A fire destroys part of your warehouse and inventory. This insurance could cover repairs and replacements.

Business interruption insurance, integrated into your company’s commercial property insurance, compensates for loss of income if your operations are temporarily interrupted by a covered event like a fire.

• Key benefit: Ensures financial continuity even if your business has to close temporarily.

• Who is it for? Restaurants, retail stores, service-based businesses and any other businesses that rely on a physical location.

• Is it mandatory? No, but it often complements property insurance.

• Example: A fire forces your hairdressing salon to close for three weeks. This insurance would help cover salaries and fixed expenses.

Professional liability insurance, also known as E&O insurance, covers errors or omissions that result in a financial loss for a client.

• Key benefit: Shields your business from costly mistakes while protecting your professional reputation.

• Who is it for? Regulated professionals and specialized advisors: accountants, lawyers, consultants, engineers.

• Is it mandatory? Sometimes it’s required by professional orders or contracts.

• Example: An accountant makes a mistake that ends up costing her client a lot of money on his taxes. This type of insurance could cover her legal defense and any resulting settlements.

Cyber liability insurance addresses risks related to IT infrastructure such as data breaches, privacy violations or business disruptions caused by cyberattacks. This insurance protects you from cyber threats.

• What’s covered: Cyberattacks, malware, theft of client information or sensitive business data.

• Key benefit: Crucial digital security in a world where cyber risks are on the rise.

• Who is it for? Any business that handles personal data or operates online: e-commerce, professional services, financial firms.

• Is it mandatory? No, it’s but increasingly necessary.

• Example: A virus disables your e-commerce platform. Cyber risk insurance may cover income loss and recovery costs.

Product liability insurance protects businesses against claims arising from manufacturing defects, poor design or mislabelling that causes harm to a customer.

• What’s covered: Legal fees, settlements, product recalls.

• Key benefit: Helps avoid costly litigation and reputational damage.

• Who is it for? Especially relevant for manufacturers, wholesalers and distributors.

• Is it mandatory? No, it’s but strongly recommended.

• Example: A batch of packaged food is contaminated. Product liability insurance may cover the cost of recalling the affected products, legal defense fees and consumer compensation claims.

This protection covers executives’ personal assets if they’re held liable for decisions made in their professional roles.

• What’s covered: Legal defences, settlements, management errors.

• Key benefit: Covers risks related to the business leaders’ personal liability.

• Who is it for? Boards of directors, non-profits, SMEs, co-operatives and condo associations. 

• Is it mandatory? It’s mandatory for condo associations in Quebec and optional in the rest of Canada.

• Example: A condominium association board member is sued after approving roof repairs without proper notice to unit owners and the substandard work leads to water leaks in multiple units. The insurance would cover their legal defense and compensation payments related to the decision-making process or wrongful acts of the board.

Commercial auto insurance covers vehicles used for business purposes: deliveries, transporting tools, business travel, etc.

• Who is it for? Businesses and professionals that rely on vehicles for work, such as delivery fleets, tradespeople, service technicians and sales representatives.

• What’s covered: Vehicle damage, liability for accidents, theft. Individual auto insurance doesn’t protect property used for business purposes.

• Difference from personal auto insurance: Personal policies don’t cover commercial use. Business vehicles must be protected with the appropriate coverage.

• Is it mandatory? Yes, depending on use and local regulations.

• Example: A company van is involved in a collision during a delivery. Commercial vehicle insurance would cover repairs and any legal claims.

Do you use a vehicle for your professional activities? Learn more about the types of vehicles we insure and all our dedicated commercial vehicle coverages.

Tailored for the construction industry, this insurance protects worksites against damage.

• What’s covered: Damage to construction sites, theft and fire during the project phase.

• Key benefit: Protects the viability of the project and minimizes financial risk.

• Who is it for? General contractors, subcontractors and developers.

• Is it mandatory? Yes, in most contracts.

• Example: A fire breaks out on a renovation site. Construction site insurance could cover lost materials and the resulting delays.

Business-owned life insurance provides a payout to the company or designated beneficiary in the event of the death of a key person. It also helps you stay on course with your projects, whether securing financial support, putting an estate plan in place, facilitating a family succession or simply enhancing your company’s value.

• Key benefit: Supports business continuity, repays debts and helps with succession planning.

• Who is it for? Owners, partners and key employees.

• Is it mandatory? No, but it can be a pillar for succession planning.

• Example: After a partner’s unexpected passing, this life insurance allows the business to buy out their shares and maintain operations.

Learn more about business-owned life insurance.

Disability insurance provides replacement income mainly for self-employed workers, and key employees as well.

• What’s covered: Temporary or permanent disability from an illness or accident, with monthly income replacement.

• Key benefit: Maintains financial stability during health-related work stoppages.

• Who is it for? Business owners, business partners, freelancers and key employees.

• Is it mandatory? No, but it’s strongly recommended.

• Example: An entrepreneur requires surgery and must stop working for several months. This insurance may provide steady income.

Learn more about disability insurance for businesses. 

Critical illness insurance pays a lump sum if the insured is diagnosed with a covered critical illness like a heart attack, a stroke or certain types of cancer.

• Key benefit: Offers financial flexibility during a health crisis.

• Who is it for? Business owners, freelancers.

• Is it mandatory? No, but it offers valuable peace of mind.

• Example: A self-employed contractor suffers a covered heart attack. The payout helps cover medical bills, maintain payroll for subcontractors and allows them to focus on recovery without financial stress.

Group insurance allows businesses to offer their employees a range of coverage types to meet their needs. Group insurance can include everything from extended healthcare and prescription drugs to dental care, disability and life insurance.

• Who is it for? Employers of all sizes looking to provide a comprehensive benefits package to their workforce to contribute to their overall wellness.

• What’s covered: Health care, travel insurance, prescription drugs, paramedical services and more. However, it all depends on which types of coverage the employer chooses. 

• Key benefit: Enhances employee retention, recruitment and workplace satisfaction.

• Is it mandatory? No, but it’s increasingly valued by workers.

• Example: If one of your employees is having a tough time at home or at work, they can get help through their group insurance plan. Support may include access to mental health professionals, an employee assistance program, a health spending or wellness account and even disability insurance coverage, if they need to take time off work.

Every business is unique. To identify the coverage that fits your specific situation, it’s best to consult a professional, such as an insurance agent or a financial services specialist.

The type of business insurance you need depends among other things on your industry, your assets, your workforce and your priorities. Whether you’re self-employed, run a small business or manage a large enterprise, assessing your real risks is essential.

By combining multiple products, you can tailor your coverage to various types of risks: legal, property, personal or digital. 

There are many types of insurance, each designed to meet specific needs:

• Liability insurance to protect against third-party incidents

• Property insurance to safeguard your buildings and equipment

• Business interruption coverage to reduce income loss

• Professional liability and cybersecurity each contribute to building a resilient organization

To benefit from complete protection, consider combining several business insurance solutions tailored to your business type, including property and casualty insurance and individual insurance or group insurance coverage. Keep in mind the coverage limits for each type of protection. This helps ensure your operations can continue no matter what the future holds. For more information or for help in making a choice, contact us and one of our agents will contact you to guide you in finding insurance suited to your needs. 

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Legal notes:

Damage insurance products are underwritten and distributed by Desjardins General Insurance Inc., manufacturer of automobile, property and business insurance in Quebec and by Certas, home and auto insurance company, underwriter of automobile, property and business insurance in Ontario, Alberta and New Brunswick. Life and health insurance products (life, health and disability insurance) are underwritten by Desjardins Financial Security Life Assurance Company.

Business insurance products are offered only in Quebec, Ontario, Alberta and New Brunswick.

Certain conditions, exclusions and limitations may apply. 

The terms and conditions of the coverages described are set out in the insurance policy, which always prevails.

These tips are provided for information and prevention purposes only. They are general in nature, and Desjardins Insurance cannot be held liable for them. We recommend using caution and consulting a damage insurance agent for comprehensive, tailored advice.