New Business Insurance in Ottawa: First-Year Checklist

In This Article

• What Ontario Requires and What It Doesn’t
• Get Your Business Details in Order Before You Shop for Coverage
• Check Whether Ottawa Licenses Your Business Type
• Where New Business Insurance in Ottawa Starts
• If You’re Starting a Business From Your Ottawa Home
• What Affects New Business Insurance Costs in Ottawa
• Your First-Year Checklist
• Frequently Asked Questions

Ontario does not generally require every business to carry a commercial insurance policy before it begins operating. Your landlord, clients, lenders or municipality may have their own insurance requirements, however. A commercial lease, for example, may specify a minimum liability limit before you can move into the space.

If you’re starting a new business in Ottawa, it helps to identify those requirements early. This checklist covers the insurance obligations that may apply, the types of coverage worth considering and the details to have ready during your first year.

What Ontario Requires and What It Doesn’t

The Government of Ontario’s business insurance guidance for new businesses explains that commercial business insurance is not generally mandatory, including for home-based businesses. That doesn’t mean every type of insurance is optional.

Two areas new business owners should pay particular attention to are automobile insurance and WSIB registration.

Automobile insurance. Ontario’s Compulsory Automobile Insurance Act requires vehicles operated on public roads to be insured. If you use a vehicle for deliveries, transporting equipment, visiting customers or other business activities, tell your insurer how it’s being used. A personal auto policy may not provide the coverage required for commercial use.

WSIB registration. The Workplace Safety and Insurance Board says most Ontario businesses with employees, including family members and certain subcontractors, must register. Its registration guidance says businesses that are required to register generally have 10 calendar days after hiring their first employee. Construction businesses can have additional obligations.

Beyond these requirements, insurance often becomes necessary because another party requires it. A landlord may specify liability coverage in a commercial lease, a client may request a certificate of insurance before work begins, a lender may require protection for financed property, and a municipal licence or permit may include its own insurance conditions.

Get Your Business Details in Order Before You Shop for Coverage

An insurer needs to know who is being insured, how the business is legally structured and what the business actually does.

If you’re operating a sole proprietorship under a business name other than your own legal name, you may need to register that name through the Ontario Business Registry. Business-name registrations are generally valid for five years and can be renewed through the registry.

If you later change your legal structure, such as moving from a sole proprietorship to a corporation, let your broker know before the change takes effect. A corporation is a separate legal entity, so the named insured and other policy details may need to be updated.

This is also a good time to prepare a clear description of your operations. Insurers will want to understand what you sell or do, where you work, whether you have employees or subcontractors, and whether any part of your work involves higher-risk activities.

Check Whether Ottawa Licenses Your Business Type

Ottawa does not require every business to hold a municipal business licence. Licensing By-law No. 2002-189 regulates specific categories of businesses.

If your business requires a municipal licence, check its insurance requirements at the same time. Several schedules in the by-law make proof of insurance a condition of licensing. Examples include:

Other regulated categories include auctioneers, tobacco and vapour product retailers, second-hand goods shops, pet shops, boarding kennels, mobile refreshment vehicles, tow service operators and hardscaping contractors.

The applicable insurance has to remain in force while the licence is active. Limits, endorsements and additional insured requirements vary by business category, so check the schedule that applies to your business on the City of Ottawa licensing list.

Keep in mind that the amount shown in a municipal by-law isn’t necessarily the highest limit you’ll be asked to carry. A landlord, client, permit issuer or contractor may require a higher limit, and requirements can also differ in municipalities outside Ottawa. Check the actual insurance wording you’ve been given rather than assuming one limit will satisfy every requirement.

Where New Business Insurance in Ottawa Starts

Commercial general liability insurance is often one of the first coverages a new business is asked to provide. It can respond to certain third-party bodily injury and property damage claims arising from business operations.

A $2 million liability limit is common in many Ottawa licensing requirements, commercial leases and contracts, but it isn’t a universal requirement. Depending on your location, type of business, project or agreement, you may be asked to carry a different limit.

Commercial property coverage protects business property such as equipment, stock and leasehold improvements against insured losses. If you’re renting your space, your lease may also create insurance requirements related to the premises. Take stock of what you own and what it would cost to replace as you choose your coverage limits.

Business interruption insurance can help replace lost income and cover certain ongoing expenses if an insured loss forces you to close or reduces your ability to operate.

Professional liability may be appropriate if you provide professional advice or services. Cybersecurity insurance may also be worth considering if you store customer information, process payments or depend heavily on computer systems.

Our small business insurance page explains how these coverages can fit together as your business gets established.

If You’re Starting a Business From Your Ottawa Home

Ottawa’s Zoning By-law 2008-250, Section 127 permits home-based businesses in areas where residential uses are allowed, subject to specific conditions.

Among other requirements, the business operator must live in the residence, and the business cannot create a nuisance through factors such as noise, odour, traffic or parking. A maximum of one on-site non-resident employee is permitted for certain dwelling types, while on-site non-resident employees are prohibited for home businesses in additional dwelling units, rooming units and apartments. Clients and customers also cannot be served on-site in those types of units.

For a home-based business within a dwelling unit, the cumulative business space generally cannot exceed 25% of the unit’s gross floor area or 28 square metres, whichever is greater. Different provisions can apply to attached garages and rooming units.

Your home insurance policy should not automatically be assumed to cover your business activities. Business property and liability can be excluded, restricted or subject to lower limits depending on the policy.

That doesn’t necessarily mean every home business needs a full commercial insurance package. If you’re working from a home office, have limited business property and don’t have clients visiting, an appropriate home-based business insurance option may meet your needs. If you’re storing inventory, receiving regular deliveries, having customers attend the property or signing contracts with specific insurance requirements, talk to your broker about the coverage required for those exposures.

What Affects New Business Insurance Costs in Ottawa

There isn’t a standard insurance cost that applies to every new Ottawa business. Even two businesses with similar revenue can have very different premiums because insurers look at the risks associated with the particular operation.

Factors that can affect the cost of business insurance include:

• Your industry and operations. An office-based consulting business presents different risks from a contractor working on customers’ property or a restaurant serving the public.
• Revenue or payroll. Depending on the coverage and type of business, these figures may be used as part of the insurer’s rating process.
• Business location. Where you operate and the characteristics of the premises can affect both property and liability exposures.
• Business property. Equipment, inventory, furnishings and leasehold improvements can affect the amount of property coverage you need.
• Employees and subcontractors. The size of your workforce, the work employees perform and your use of subcontractors may affect underwriting.
• Vehicles. Business-owned vehicles and the way personal vehicles are used for work can create additional insurance needs.
• Coverage limits and deductibles. Higher limits, additional coverages and policy endorsements can affect the total premium.
• Claims history. If the business or its principals have relevant prior claims experience, an insurer may consider it during underwriting.
• Contractual requirements. Leases, licences and client agreements may require limits or coverages beyond what you would otherwise purchase.

A new business may also need more than liability insurance. Adding commercial property, business interruption, cyber or other coverages increases the total policy premium because you’re purchasing additional protection.

For a broader look at the coverages a business may need, see our commercial insurance page.

Your First-Year Checklist

1. Complete any required business registration. Make sure the legal name and structure of the business are established before arranging coverage, and update your broker if the entity changes.
2. Check the City of Ottawa licensing list. If your business falls under Licensing By-law No. 2002-189, review the insurance requirements for your category before applying.
3. Check your WSIB obligations when you hire. If your business is required to register, WSIB generally requires registration within 10 calendar days of hiring your first employee.
4. Read the insurance clause in your lease before signing. It may specify liability limits, property coverage or additional insured requirements.
5. Make sure vehicles are insured for how they’re actually used. Tell your insurer about deliveries, equipment transport, client visits and other business use.
6. Inventory your business property. Include equipment, stock, furnishings and leasehold improvements when determining how much property coverage you may need.
7. Ask clients for their insurance requirements early. Some contracts specify liability limits, additional insured wording or certificates of insurance before work can begin.
8. Review your coverage as the business changes. New employees, higher revenue, additional equipment, new premises or changes in operations can affect the coverage you need. Don’t wait until renewal to tell your broker about a significant change.

Frequently Asked Questions