Why is liability insurance essential?

Liability insurance protects a business against financial losses resulting from risks such as fire, theft, natural disasters, or liability lawsuits. For businesses with financing, this insurance is crucial as it ensures the protection of financed assets and guarantees operational continuity in the event of a disaster.

Specific requirements when dealing with a creditor

When a business finances a building or equipment with the help of a creditor (bank or other financial institution), certain requirements must be met to secure the loan:

Coverage of the loan amount

The financed building or equipment must be insured for an amount sufficient to fully cover the loan in the event of a disaster.

Creditor listed on the insurance policy

It is mandatory to add the creditor as a “named beneficiary” or “mortgagee” on the insurance policy. This clause ensures that the creditor will be compensated in the event of a disaster affecting the financed assets.

Key coverage to consider in Québec

In addition to the requirements related to creditors, here are some essential protections for businesses:

• Commercial property insurance: Covers buildings, equipment, inventory, and other assets.
• General liability insurance: Protects against claims for bodily injury or property damage caused to third parties.
• Business interruption insurance: Compensates for lost revenue in the event of an unexpected disruption of operations.
• Cyber insurance: Protects against risks related to cyberattacks, such as data breaches or financial losses.
• E&O liability insurance (Errors and Omissions): In the technology sector, covers damages caused by errors, negligence, or omissions in the provision of technology services or products, thus protecting businesses from client claims for losses related to failures in their solutions.
• Commercial vehicle insurance: Required for businesses using vehicles in their operations.
• Specialized insurance: For example, equipment breakdown insurance or excess liability insurance.
• Accounts Receivable insurance: (Also known as Trade credit insurance) Protects companies against the risk that the buyer of goods or services won’t pay the seller. The risks trade credit insurance covers include a payor’s insolvency, defaulting on payments, non-acceptance of goods, losses resulting from war or civil unrest, currency devaluation.