Small businesses in Canada may buy insurance, but many hesitate to use it when the need arises. TD Insurance’s research shows that nearly half of insured firms would avoid filing a claim in an emergency, often out of fear that premiums could rise, policies could be jeopardized, or because they simply don’t understand what’s covered.
Economic pressures also push owners to scale back or choose bare-bones policies, leaving gaps that can prove costly when disruptions occur. According to TD Insurance vice-president of small business insurance, Tang Trang (pictured), brokers can help bridge that gap.
Trang acknowledged that business insurance is inherently more complex than personal auto or home insurance, making it harder for small business owners to grasp what they’ve actually purchased. Policy language can be dense, and coverages don’t always translate easily into everyday business scenarios.
That’s where brokers and advisors have a critical role to play. Trang said brokers must help “decode” the complexity, tailoring coverage to the unique needs of each business and ensuring clients understand the practical value of their policies. In his view, brokers can move beyond simply placing coverage to becoming advisors, helping owners overcome fear and correct misconceptions.
“They can answer your questions, but only if they know how to ask the right ones themselves,” Trang told Insurance Business.
Trang stressed that advisors need to dig deeper into the client’s business, starting with the industry itself – whether retail, contracting, or professional services – and then moving into the specifics of how that business operates day to day.
That means exploring what risk management practices are already in place. For example, are restaurant employees being trained on safety procedures to reduce liability? Does the business have alarms or surveillance systems to deter theft? Each detail can help tailor coverage that is both comprehensive and relevant.
Trang said that when brokers understand their client’s business, they can go beyond simply recommending liability insurance. A truly effective package might combine commercial property, business interruption, auto coverage, or even protection for tools and equipment, depending on the sector.
“It’s always about knowing your customers and how you can help their business,” he said.
Looking ahead, Trang believes brokers will play an increasingly active role in educating small business clients. He pointed out that industry bodies like the Insurance Bureau of Canada have long stressed the importance of consumer education, but emphasized that awareness is not a one-time event.
Business insurance remains a complex product, and without regular reinforcement, owners can quickly forget what protections they have or how to use them.
He noted that risks do not disappear when economic conditions shift. Whether the economy is booming or slowing, exposures such as network vulnerabilities, flood risks, or liability issues remain. In fact, as cities become more densely populated and catastrophic events rise, the need for education only grows.
“If there are any words of wisdom to be offered to business owners it would be not to get discouraged because they don’t have to be experts in the field of insurance,” Trang said.
Most insurance companies, he added, have online educational materials that can help them understand what kinds of risks their business is exposed to.
“At the end of the day, I think the safest thing they can do is to call an expert as there is no better way to understand what kind of coverage you need,” Trang said.
The TD survey showed the scale of the disconnect. While almost all small business owners (94 percent) report having business insurance, just over half (52 percent) said they would actually use it in an emergency. Instead, many indicated they would rely first on credit cards (50 percent), bank loans (48 percent), lines of credit (47 percent), or even friends and family (36 percent).
Economic pressures may be reinforcing this reliance on credit. The survey found 32 percent of owners cited rising expenses as their top challenge, up from 29 percent last year. Misconceptions are also at play, with many still viewing insurance as useful only in the case of major disasters such as fires or floods.
The survey was conducted online with 400 Canadian small business owners and senior decision-makers, focusing on industries including contractors (excluding general contractors), real estate investors, restaurants, management consultants, grocery and convenience retailers, and clothing retailers.
