Buying a Business: Insurance Considerations

Buying a business or starting your own can be an exciting and challenging endeavor. Building a brand and business from the ground up can be intimidating for even the most seasoned entrepreneur. Considering the purchase of an existing business can appear less risky however, before you turn the lock and open the door to start your first day on the job, there are several insurance considerations you should keep in mind:


Insuring Your Business Generally

The first category of insurance to consider is owners insurance, specifically partners and key person insurance. There may be tax deductions and business expenses associated with this insurance, so please make sure you talk to your Insurance Broker for further details.

Life insurance — Protects your family in the event that something happens to you. If you are operating a sole proprietorship this type of insurance will cover your personal liability for any of the businesses debts.

Disability insurance — Will provide you with income for a specified period of time, if you are unable to work due to an injury or illness.

Partnership insurance — If your business partner passes away, partnership insurance will allow you to purchase the shares and continue running the business.

Critical illness insurance — Provides you with a lump sum benefit if you are diagnosed with a critical illness.

Key person insurance — If you rely on certain key people to help run your business, protect yourself against the loss of these key employees.


Property Insurance

The second category of insurance to consider is property insurance.  In the event there is an event that physically causes harm to your business property, this type of insurance can have you covered.  Property insurance does not just cover the property and building in which you conduct your business.  Coverage can also include business interruption, mechanical issues and crime. Depending upon the nature of your business, a circumstance that causes you to temporarily close your doors can be costly.

Property insurance — Property insurance will cover the property and buildings owned by your business in the event of damage due to fire and other perils.  Talk to your Insurance Broker to ensure you are aware of possible policy exclusions.

Contents insurance — Covers assets that you store at your business premises. Consider whether you are leasing your business space, owning your property or working out of your home to decide which kind of contents insurance you may need.

Business interruption insurance — If you need to shut down your business temporarily due to a fire or other peril, business interruption insurance will cover your loss of earnings until you are back in business.


Liability Insurance

Once your business is up and running there may be an occasion where an employee makes a mistake, or your product or service actually hurts a customer.  Liability Insurance is designed to offer protection against third party claims. Under the liability umbrella there are specific options to protect professionals, directors and officers and businesses generally.

General liability — Covers injury to clients.  For more information on Commercial General Liability Insurance click here.

Product liability — Provides protection in the event that your products are defective or cause serious harm to those using them

Professional liability insurance — Provides protection if you are sued by a client for errors, omissions or negligence, when performing professional services


Cyber liability — Protects in the event of a lawsuit stemming from an electronic security breach involving compromised personal or commercial information. Can include situations relating to the theft of devices containing organizational, client, employee, or similar data.  For more information on Cyber Liability click here.

Although all of the above types of insurance may appear daunting, sitting down and speaking to your Insurance Broker before you purchase your business can inform you of the added business insurance costs and protections available to you.


If you ever have questions regarding your insurance policy or coverage in general, contact Rizk Insurance today and we’ll help answer any inquiries you may have.


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