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Starting a business comes with new responsibilities and risks. Insurance helps protect what startups are building, but finding the right broker can be confusing for founders. Many Canadian startups want coverage that fits their unique stage and industry.
Not all insurance brokers offer the same expertise or services. Some focus on specific industries, and others only work with certain insurers. Knowing what to look for makes the process simpler.
Key criteria when choosing a Canadian startup insurance broker
Licensing in your province
A broker legally operating in Canada holds an active license for each province or territory in which they serve clients. Licensed brokers follow local rules and regulations. You can verify a broker's license through your provincial insurance regulator, such as RIBO in Ontario or Insurance Council of British Columbia.
Relevant startup and sector experience
Startup insurance needs change quickly as the business grows. Brokers with experience working with early-stage companies understand how coverage requirements shift over time. They know which policies matter most at different stages and can spot risks that generic brokers might miss.
Access to multiple insurers and insurtech markets
Some brokers only work with a limited list of insurance companies. Brokers with access to both traditional insurers and insurtech providers can compare business insurance quotes from more sources. This broader selection often leads to better coverage options and competitive pricing.
Key benefits of broker market access:
- Competitive pricing: More insurers means more quotes to compare
- Specialized products: Insurtech companies often create policies designed for startups
- Coverage flexibility: Different insurers have different strengths and specialties
Claims support and response time
Claims support separates good brokers from great ones. The best brokers respond to questions within hours, not days. They walk clients through the claims process and advocate with insurers when disputes arise.
Transparent compensation structure
Insurance brokers earn money through commissions or fees. Most Canadian brokers receive commissions from insurance companies, typically 10-20% of the annual premium. Some charge consulting fees for complex risks. Understanding how your broker gets paid helps reveal potential conflicts of interest. One of Summit's core values is how we get paid. View our compensation disclosure here.
Questions to ask a prospective broker before you sign
Which policies do you recommend for my stage and industry?
A good broker explains the main types of business insurance for startups that fit both your current size and your industry. They can distinguish between essential coverage and nice-to-have policies. For example, a tech startup might need cyber liability insurance immediately, while a consulting firm might prioritize professional liability coverage.
How will you benchmark pricing and coverage?
Brokers can collect quotes from several insurance companies. Ask how they compare prices and coverage details between options. Some brokers use technology platforms to check the market, while others rely on their network of insurers.
How often will you review and adjust my program?
Startups grow and change quickly, so insurance needs shift. Most brokers review coverage annually, but some check quarterly for fast-growing companies. Ask about their process for making updates if your business changes direction or scales.
Can you share a recent claims success story?
The claims process can be challenging for businesses. A broker's track record with claims shows how they support clients when it matters most. Look for specific examples of how they helped resolve disputes or expedite payments.
Essential insurance policies for Canadian startups
Startups face different risks as they grow and develop. Each insurance policy serves a distinct purpose and covers different types of incidents.
Commercial general liability
Commercial general liability insurance covers claims from third parties who experience bodily injury or property damage as a result of business operations. This includes incidents that happen on business premises or because of products or services provided.
Errors and omissions professional liability
Errors and omissions (E&O) professional liability insurance covers claims related to mistakes in professional services. If a client experiences financial harm due to advice, consulting, or services provided, this coverage addresses legal defense costs and settlements.
Cyber liability insurance
Cyber liability insurance addresses risks associated with data breaches, ransomware, or privacy violations. It covers costs related to responding to cyber incidents, such as investigation, notification, legal fees, and restoring affected systems. This coverage has become essential for most Canadian startups, regardless of industry.
Directors and officers insurance
Directors and officers (D&O) insurance covers founders and company leaders against claims resulting from management decisions. This includes personal liability for alleged breaches of fiduciary duty or governance errors. Many investors require D&O coverage before funding rounds.
Common D&O claim scenarios:
- Employment practices disputes
- Securities violations
- Breach of fiduciary duty allegations
- Regulatory investigations
Common mistakes founders make when buying insurance
Buying only the cheapest policy
Selecting the lowest-priced insurance policy often results in limited protection. Lower premiums typically mean lower coverage limits or more exclusions, which can leave a business exposed to uncovered risks.
Waiting until investors demand proof
Delaying insurance purchases until investors request documentation leaves businesses unprotected during critical early stages. Coverage is not retroactive, so incidents that occur before a policy starts are not covered.
Ignoring exclusions and sub-limits
Insurance policies include exclusions and sub-limits that outline what is not covered or place caps on certain types of claims. Overlooking these details can lead to unexpected gaps in protection, especially if a claim falls under an excluded category.
How much does startup insurance cost in Canada
Startup insurance costs in Canada vary based on coverage type, business size, and specific risks involved. Each insurance policy addresses different exposures, and prices reflect the level and scope of coverage.
Commercial general liability insurance typically costs $500-$1,500 annually for most startups. Cyber liability insurance ranges from $1,000-$3,000+ per year, depending on data exposure. Professional liability coverage varies widely, from $800-$4,000+ annually based on service type and revenue.
Factors that influence premiums:
- Industry risk level
- Geographic location of operations
- Annual revenue and payroll
- Selected coverage limits
- Deductible amounts chosen
Why a boutique tech-enabled broker adds value
Personalized advisory vs call-center service
Boutique tech-enabled brokers assign a dedicated advisor to each client. This advisor learns about the startup's operations, goals, and risk exposures. This differs from call-center services, where clients often speak to different representatives and receive general information.
Faster certificates and digital dashboards
Tech-enabled brokerages use platforms that allow clients to access insurance documents and certificates online. Startups can download proof of insurance, review coverage details, and submit claims through digital dashboards, reducing waiting times.
Leverage with niche insurers
Boutique brokers often have connections with insurance companies that specialize in certain industries or business models. These niche insurers offer products that address risks unique to startups, such as emerging technologies or rapid growth.
Ready to protect your startup? Get a tailored quote from Summit
Summit works with Canadian startups to deliver insurance options that fit each business's operations and growth plans. Each quote considers the company's stage, sector, and risk profile.
Summit uses a digital platform that allows startups to share information, upload documents, and review policy options online. Most quotes are delivered within a few business days. To begin, startups can visit the Summit quote request form and enter basic business details.
Frequently asked questions about choosing an insurance broker
How long does it take to get startup business insurance coverage in Canada?
Most policies can be bound within one to two weeks after completing applications and underwriting review. Depending on complexity, some policies can even be placed on the same day.
Do insurance brokers charge Canadian startups separate fees beyond commissions?
Most brokers receive compensation through insurer commissions, though some may charge consulting fees for complex risks or specialized advice.
Can startups switch insurance brokers mid-policy without losing coverage?
Yes, you can change brokers mid-term while keeping existing policies, though timing affects service continuity and renewal negotiations.
Will startup insurance premiums increase after securing funding rounds?
Funding may increase premiums due to higher revenue and expanded operations, but it also improves coverage options and insurer appetite for the risk.
