An insurance broker handing a document to a business owner to sign

How the Pandemic Led to the Rise of Short-Term Business Insurance

Jan 6 2021

Nothing could have prepared nations, businesses, or individuals for the sudden shift brought about by COVID-19. Due to the pandemic, more than 50% of Canadian businesses have lost around 20% of their revenue. Some businesses were forced to downsize or request loans to survive, and sadly, even as of late 2020, an additional 56,296 Canadian businesses closed amidst the pandemic. This shows that the current landscape remains highly challenging for businesses to survive and thrive.

This was exactly the kind of scenario that made companies turn to their insurance providers for help. Many submitted insurance claims for lost revenue due to the pandemic. Most business owners shared the view that this should be under the business interruption coverage. However, across the globe, insurance providers took a different stand – which was in line with the fact that most of the current business interruption insurance policies exclude viruses or communicable diseases.

There has since been numerous strained relationships between insurance providers and businesses. It has even escalated to class-action lawsuits and government interventions in some parts of the world. Though some disputes related to this matter are ongoing, the commercial insurance industry has recently grabbed the opportunity to innovate and shine as a problem-solver during these uncertain times.

The solution to this is an insurance product devised to help professionals and small businesses save on insurance costs while still getting the coverage they need. We’re talking about short-term business insurance.

Let’s get started!

Small business owner sitting on her desk, doing calculations

What is Short-Term Business Insurance?

Short-term business insurance is an insurance product pioneered and made available by Hiscox, one of the leading small business insurance providers, in partnership with Thimble, a well-known insurance producer that helps small businesses succeed.

This type of insurance was conceptualized amidst the COVID-19 pandemic as a response to the needs of professionals and small businesses during the global crisis. Short-term business insurance works by providing coverage in two ways:

  1. On-demand for just a certain time period and defined in hours, days, weeks, or months; or
  2. Renewable by the month and automatically renewed on a monthly basis unless the policy is cancelled.

This is different from usual insurance premiums in that they are typically paid to cover an entire year.

The Two Types of Short-Term Business Insurance

Short-term business insurance can be split into two kinds: short-term general liability insurance and short-term professional liability insurance. You might be wondering about other forms of business insurance. To answer that, short-term business insurance is a relatively new insurance product. So, though it is likely to catch on and be offered by different insurance providers, only time will tell if the same “short-term” arrangement will be made available for other business insurance types (e.g. commercial auto insurance, worker’s compensation insurance, or cyber insurance

For now, short-term business insurance specifically focuses on providing coverage for general liability and professional liability – both of which are a great start! After all, general liability insurance can be considered as the staple insurance for all business types due to its extensive protection against third-party liabilities. For the same reason, professional liability insurance, also known as errors and omissions (E&O) insurance, is a must-have for nearly all types of professionals including consultants, accountants, architects, and engineers to name a few.

The Coverage of Short-Term General Liability Insurance

Third-Party Property Damage

If your business operations lead to any form of third-party property damage, general liability insurance can help with the repair/replacement costs, as well as any related legal fees. 

Third-Party Bodily Injuries

If your business operations causes any form of third-party bodily injury or if a third-party individual is physically injured within your premises (and you are found to be responsible), general liability insurance will help with the associated medical and/or legal fees. 

Third-Party Personal/Reputational Injuries

If anyone working for your business causes personal or reputational injury to a third-party individual or business through libel or slander, general liability insurance will cover you for the legal costs associated. 

Advertising Injuries

If your business is sued for stolen ideas, copyright infringement, libel, or slander in relation to your advertising/marketing efforts, general liability will help with the legal costs involved.

The Coverage of Short-Term Professional Liability Insurance

Negligence-Related Claims

If you, as a professional, are charged with negligence (whether alleged or actual) in relation to incidents of errors/oversights, missed deadlines, budget overruns, and incomplete work, professional liability insurance is there to give you the protection you need. 

Claims Regarding Past (Pre-Insured) Work

Professional liability insurance, through the right provider, can even extend towards your past projects if a lawsuit is filed against you right after the start of your insurance period. 

Third-Party Personal Injury

If through the course of your work you are charged with personal injury to third-party individuals or businesses via libel, slander, and the like, professional liability insurance will help to cover the damages and costs.

A third-party individual looking upset after seeing libellous material online

How Short-Term Business Insurance Protects Small Businesses Amidst COVID-19

As a small business owner or professional, you know that surprise expenses from third-party liabilities is the last thing you want during these uncertain times. In fact, many businesses or professionals simply cannot afford such expenses. Unfortunately, because of current challenges, many businesses and professionals also cannot afford to maintain insurance policies that are paid by the year. In this case, short-term business insurance is the solution. 

Insurance Only When Needed

If your business will be operating for only a few months or seasons of the year (e.g. landscaping businesses) or if your business currently has limited operational hours, short-term business insurance will help you save on insurance costs while also providing extensive third-party liability coverage.  

Likewise, as a professional, if you are only taking on projects at certain times or you can only offer your services at specific times, short-term business insurance will give you the third-party coverage you need at a reduced cost.

By saving on insurance costs, you will be able to maximize your revenue while still having peace of mind. 

Cancel at Any Point

If your business will need to halt services (whether temporarily, for an extended period, or permanently), you can simply cancel your short-term business insurance without any consequences. You only pay for the insurance that you really need. 

Because of this flexibility, short-term business insurance is also the best option for new businesses that are just starting out. Should the need arise, to pause/close the business or cut expenses to the bone, short-term insurance can be cancelled at any time. 

In conclusion, short-term business insurance is the first of many insurance innovations that are specifically designed for the constantly evolving times. It is extensive like its long-term insurance counterparts, however, it comes with reduced costs and greater flexibility. It is a lifesaver for many businesses and professionals alike.   

Get The Best Insurance Plan for Your Business

KASE Insurance is one of the top brokers of business insurance across Canada. We do all we can to help our clients be one step ahead. We have served hundreds of business owners and professionals over the years and we have garnered many awards along the way. 

No matter the type of business you own or your professional occupation, we can put together the best short-term business insurance policy that is tailor-fit to your needs. With KASE Insurance, you can be 100% sure that you are in good hands.

If you have any questions for us, we’d be happy to connect. Contact us today or request a quick quote to get started!

Leave A Comment