How do general and professional liability insurance benefit small businesses in Alberta?

June 2, 2024

Alberta's dynamic small business scene is an essential pillar of its economy. Ranging from tech startups and cozy cafes, as well to local construction firms and service businesses - these enterprises create jobs while building communities and spurring economic expansion. But even successful entrepreneurs face unexpected hurdles to their business's success. So, How do general and professional liability insurance benefit small businesses in Alberta?

Liability Looming

Small businesses must navigate an intricate web of risks every day in their business environments, from customer slips and falls on your premises to product malfunctions causing injuries; or simply an innocent mistake could prompt clients to allege negligence against your service delivery, leading to lawsuits which leave businesses facing substantial legal fees, medical expenses and damage awards as a result of these instances.

General and professional liability insurance plays an essential role in Albertan small businesses' defense against liability risks. 

Understanding General Liability Insurance in Alberta

General Liability serves as your first line of defense against third-party claims of bodily injury or property damage related to business activities that you conduct in Alberta. A typical GGL policy typically offers coverage against such liabilities. Here's what's included:

  • Third-Party Bodily Injury Coverage: Imagine one of your customers tripping on a loose floorboard and becoming seriously injured; GGL covers their medical costs.
  • Third-Party Property Damage: Perhaps during plumbing repair an unexpected mishap damages kitchen cabinets belonging to one of your clients - GGL provides coverage to cover repair costs associated with these mishaps.
  • Medical expenses: If someone becomes injured as a result of your business operations on your premises, GGL can assist them with covering medical bills associated with that injury.
  • Legal defense costs: Even when dealing with frivolous lawsuits, legal battles can be expensive and time-consuming. GGL covers lawyer fees so you can defend unfounded allegations without financial strain on the business.

GGL policies come in various flavors to best meet your specific requirements.

  • Commercial Package Policy: CPP offers businesses all-encompassing protection in one package by combining GGL insurance coverages like General Liability with property coverages like property, liability, and auto.
  • Standalone General Liability Coverage: Ideal for businesses that face unique risks, this solution allows you to customize GGL coverage according to individual concerns and risk profiles.

GGL policies typically do not cover intentional acts, pollution damage, and certain professional service-related errors and omissions!

Benefits of GGL for Alberta Small Businesses 

Owning an effective general liability policy is advantageous to your Alberta small business for many reasons:

  • Financial Protection: Lawsuits can be financially devastating for a business. GGL acts as a safety net by covering legal and medical costs associated with litigation proceedings - protecting it against potential financial ruin and protecting its bottom line.
  • Peace of Mind: Knowing you're protected provides your business with confidence to operate without worrying about lawsuits crippling its operations. 
  • Build Trust With Clients: GGL proves your commitment to safety and responsibility while building up client confidence with each interaction between yourself and customers.
  • Secure Contracts: GGL coverage may be required as part of certain contracts, opening doors to new business opportunities.
  • Risk Management Tool: GGL encourages proactive safety measures to prevent accidents and limit liabilities.

Professional Liability Insurance: Protecting Your Expertise

Businesses providing professional services like accountants, engineers, or consultants often need more protection than General Liability can offer; here comes Professional Liability Insurance.

PLI protects businesses in Alberta against negligence claims from clients that lead to financial loss for themselves, with professions like architects, lawyers, and financial advisors often needing this form of cover for financial loss due to negligence claims from them. 

An umbrella policy generally offers these coverage benefits:

  • Defense costs: If a client sues you alleging negligence in your professional services, PLI provides legal fees protection. 
  • Damages awarded to clients: In the unfortunate event that the court finds your negligence and awards damages against you, PLI can assist in meeting these financial obligations.

Touted benefits of Professional Liability Insurance for Alberta Small Businesses

PLI offers several distinct advantages tailored to protect the professional services business: 

  • Protect Business Assets: Being subjected to legal proceedings could threaten the viability of your professional service business and cause serious financial strain on it if any court cases ensue with large financial judgments against it. PLI will protect both its assets as well as ensure your firm can weather legal storms successfully.
  • Attracting and Retaining Clients: Demonstrating your commitment to high-quality services through PLI can attract new clients while building trust between existing ones, leading to enhanced client retention rates.
  • Building Your Professional Reputation: Professional Liability Insurance can enhance both your professional image and credibility, and promote risk mitigation strategies.
  • Being Covered Incentivizes Service Improvement and Risk Mitigation: Knowing you have coverage motivates service excellence while mitigating risks that might otherwise present themselves.

Selecting an Appropriate Liability Insurance Plan for Your Alberta Business

Selecting GGL or PLI insurance policies that best meet the needs of an Alberta business requires carefully considered decisions. Several factors need to be taken into consideration:

  • Industry and Specific Risks: Every industry faces its own set of unique liabilities; bakery owners face different issues than construction contractors, for instance. You should identify what potential liabilities exist specific to your operations.
  • Consider Your Client Base and Lawsuit Potential: Assess who are your clients; do they directly interact with your products or services, are they high risk or likely to face litigation? Tailor your coverage according to this factor.
  • Coverage Limits: When setting coverage limits for an insured claim, be mindful that they provide enough protection without exceeding your budget constraints. Select limits that provide adequate security without draining resources away.
  • Deductible Amount: Your out-of-pocket expense before insurance kicks in is determined by this number, while increasing it lowers premiums but requires upfront expenses should there be a claim made on it. A higher deductible costs more upfront but reduces premium costs over time.

Finding Your Fit: The Power of a Broker

Navigating the insurance landscape can be complex. That is why Summit Insurance, an established provider of Commercial and Business Insurance in Edmonton and Contractor Liability insurance coverage in Alberta, makes the services of their qualified brokers so invaluable.

Brokers act as your advocate, assessing your individual needs, risks, and budgets before providing quotes from various insurance providers for GGL or PLI policies that best match those needs in Alberta small businesses!

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