Small Business Insurance in Ontario: What You Actually Need (And What You Can Skip)

A single slip-and-fall lawsuit can cost an uninsured small business $50,000 or more in legal fees and damages — enough to shut down most owner-operated companies overnight. Yet we regularly meet Ontario business owners who are either completely uninsured, relying on a home insurance policy that explicitly excludes business activities, or paying for coverages they do not need.

The truth is straightforward: every small business in Ontario needs some form of commercial insurance, but not every business needs the same coverages. Here is how we help our clients figure out exactly what belongs on their policy and what does not.

Why Small Business Insurance Is Not Optional

Ontario does not have a single law that says "all businesses must carry insurance." But in practice, going without coverage is nearly impossible — and always risky.

Landlords require it. Almost every commercial lease in Ontario mandates that tenants carry a minimum of $2 million in general liability coverage and name the landlord as an additional insured. No certificate of insurance, no keys.

Clients and contracts require it. If you bid on contracts, provide professional services, or work with larger companies, you will be asked for proof of insurance before the work starts. Government contracts and municipal permits almost always have minimum insurance thresholds.

Your livelihood is at stake. Without CGL coverage, a single claim for bodily injury or property damage gets paid out of your personal assets. In Ontario, plaintiffs can pursue the business owner personally, which means your savings, your home, and your future earnings are all on the table.

The Five Coverages Every Ontario Small Business Should Evaluate

Not all of these apply to every business. But these are the five we discuss with every new commercial client, and most businesses end up needing at least three of them.

1. Commercial General Liability (CGL) — The Non-Negotiable

CGL insurance is the foundation of every small business insurance program. Full stop. It covers third-party claims for:

• Bodily injury — A customer slips on your floor, a delivery person trips on your front step, a passerby is injured by your signage.
• Property damage — Your employee damages a client's equipment during a service call, or a product you sell causes damage to someone's home.
• Personal and advertising injury — Allegations of libel, slander, copyright infringement, or false advertising.

CGL also covers your legal defence costs, which often exceed the settlement itself. Most Ontario policies start at $2 million per occurrence, and many landlords and contracts require that amount as a minimum.

What it does not cover: Damage to your own property, your own injuries, employee injuries, professional errors, or auto accidents. Those require separate coverages.

2. Commercial Property Insurance — If You Own Stuff

If your business owns equipment, inventory, furniture, tools, or signage — or if you have invested in leasehold improvements — commercial property insurance protects those assets against fire, theft, vandalism, water damage, and other covered perils.

This is not just for businesses with storefronts. A photographer with $30,000 in camera gear, a caterer with commercial kitchen equipment, or a contractor with tools stored in a shop all have significant property exposure. If losing that property would prevent you from operating, it needs to be insured.

3. Business Interruption Insurance — The One People Forget

Business interruption coverage replaces your lost income and pays ongoing fixed expenses (rent, loan payments, payroll) if a covered event forces you to close temporarily. A kitchen fire, a burst pipe, or a severe storm can shut a business down for weeks or months.

This coverage is almost always bundled into a commercial package policy alongside CGL and property insurance. It is one of the most valuable coverages available, and it is also one of the most commonly overlooked by small business owners who focus only on liability.

4. Professional Liability (Errors & Omissions) — If You Give Advice or Provide Services

If your business provides professional advice, designs, consulting, or any service where a mistake could cause a client financial loss, you need professional liability insurance. CGL does not cover claims arising from professional errors — that is a separate coverage entirely.

Some professions in Ontario are required by their regulatory body to carry E&O insurance. Accountants, engineers, architects, and real estate agents all have mandatory minimums. But even unregulated service businesses — marketing consultants, IT providers, bookkeepers — face real exposure if a client alleges that your work caused them a loss.

5. Commercial Auto — If You Drive for Business

Your personal auto policy has an exclusion for business use. If you or your employees drive for work — making deliveries, visiting clients, transporting equipment — you need commercial auto insurance. This applies even if you use your personal vehicle for business purposes.

At minimum, talk to your broker about adding a business use endorsement to your personal auto policy. For businesses with dedicated vehicles, a standalone commercial auto or fleet policy is the right move.

The Home-Based Business Trap

This is the scenario we see most often with new clients, and it is the one that catches people off guard.

You start a side business from home — maybe you sell products online, run a consulting practice, or offer a trade service. You assume your home insurance covers you. It does not.

Standard home insurance policies exclude business activities. If a client visits your home and is injured, your home insurer can deny the claim outright. Worse, if you never disclosed the business to your insurer, they can cancel your entire home policy — leaving you without home insurance as well.

Here is what you need to do:

1. Notify your home insurer immediately. Failing to disclose a home-based business can void your coverage.
2. Ask about a home business endorsement. For low-risk businesses with no client visits, no inventory, and under $10,000 in revenue, a simple endorsement added to your home insurance policy may be sufficient.
3. Get a standalone commercial policy if you have outgrown the endorsement. If clients visit your home, if you carry inventory, or if your revenue is significant, a separate small business insurance policy is the right answer.

Bundling: The Commercial Package Advantage

Most of our small business clients do not buy individual coverages separately. Instead, they purchase a commercial package policy — sometimes called a business owner's policy — that bundles CGL, commercial property, and business interruption into a single policy.

The advantages are real:

• Lower premiums. Bundled policies are almost always cheaper than buying each coverage individually.
• Simpler administration. One policy, one renewal date, one broker to call.
• Fewer coverage gaps. When coverages are on separate policies from different insurers, there is always a risk that a claim falls into a gap between them. A single package policy eliminates that risk.

We can add endorsements to a package policy for things like equipment breakdown, sewer backup, crime, or tenant legal liability — tailoring the policy to your exact situation without the complexity of managing multiple standalone policies.

What It Costs

Every business is different, but here are the ranges we typically see for Ontario small businesses:

• CGL only ($2M limit): $500 to $2,000 per year
• Commercial package (CGL + property + business interruption): $1,000 to $5,000 per year
• Professional liability: $800 to $3,000 per year depending on profession and revenue

The biggest factors driving your premium are annual revenue, industry classification, number of employees, claims history, and the specific coverages and limits you select. A home-based consulting business with no employees will pay a fraction of what a restaurant or contractor pays.

One thing to be aware of: Ontario charges 8% provincial sales tax on commercial insurance premiums. This is PST, not HST, so there is no input tax credit available.

Do Not Forget WSIB

If you hire employees in Ontario, you are almost certainly required to register with the Workplace Safety and Insurance Board (WSIB) within 10 calendar days of your first hire. WSIB provides no-fault workplace injury coverage and is mandatory for most industries, with expanded requirements in construction.

WSIB is not commercial insurance — it is a government program funded by employer premiums. But it is a critical piece of your overall risk management, and failing to register when required can result in significant penalties.

Even if your industry is not on the mandatory list, you can opt into WSIB coverage voluntarily. For sole proprietors and partners, optional personal coverage through WSIB is worth considering if you do physical work.

What To Do Next

If you are starting a business, renewing your coverage, or wondering whether your current policy actually matches your risk, here is the simplest path forward:

1. Make a list of your business activities, assets, revenue, and number of employees.
2. Identify your obligations — check your lease, contracts, and any professional licensing requirements for minimum insurance thresholds.
3. Talk to a broker. An independent broker (like us) shops your coverage across multiple carriers — Intact, Aviva, Wawanesa, Gore Mutual, and others — to find the best combination of coverage and price. We are not locked into one insurer's products.

We have been advising Ontario businesses from our Durham Region offices since 1945. Whether you are a one-person home-based operation or a growing company with employees and commercial space, we will build a policy that covers what matters and skips what does not.

Get a quote or call us at (905) 576-7770 to get started.