Running a business is ripe with exciting opportunities. However, it is also full of unexpected setbacks that can impact your operations. These setbacks are exactly why knowing the most common risks helps your business as a whole. Understanding the risks can not only help business owners identify potential threats and strengthen risk management strategies, but also help them know what coverage is needed most. Here is a list of the most common business insurance claims.
1. Property Damage Claims
To start, one of the most common business insurance claims comes with property damage. This claim can cover the building, equipment, or inventory that vandalism, fires, storms, and other perils have damaged. In Canada, the most common property-related claims come from damage caused by extreme weather events. Losses from wildfires, floods, hailstorms, and wind damage have averaged about $2.2 billion annually over the past 10 years.
Also, property damage claims that come from glass or structural impact are another common business insurance claim. Claims for broken glass or structural damage from vandalism, hail, or accidental effects are widespread. While they often fly under the radar, the repair costs can accumulate and become quite costly.
2. Theft and Burglary Claims
Another one of the most common and costly claims for businesses is theft/burglary. In 2024, 45% of small businesses reported experiencing anything from break-ins and theft, which had increased exponentially from the previous year. Theft can encompass anything from stolen cash and merchandise to essential business equipment and supplies.
Moreover, theft of tools and equipment is a significant loss for those in the trades. In Canada, an estimated $46 million worth of tools/equipment is stolen from construction sites each year. Therefore, it is crucial for tradesworkers or those who rely on their equipment to have it adequately covered.
3. Commercial Auto and Vehicle Claims
Next, a widespread business insurance claim for businesses that operate vehicles is commercial auto and vehicle claims. Businesses, such as delivery services, supply chain operations, or mobile professionals, face risks from vehicle accidents. While a collision claim is less likely than theft or property damage claims, such claims can be expensive. When injuries, property damage, or vehicle repair costs are involved in these incidents, it can get costly.
4. Business Interruption Claims
Another common business insurance claim, and one of the most financially devastating, is business interruption. This claim is made when the business suffers a loss of income as a result of a covered event. For example, if there is a fire that causes the company to close temporarily, this claim would be filed. Without this coverage, your business may be forced to close or stunt its longevity.
5. Cyber Liability and Cybercrime Business Interruption Claims
Cyber liability is one of the fastest-growing areas for insurance claims. With the sophistication of technology also comes an increase in the advancement of cybercriminals, as well as a surge in phishing and data breaches. These claims can be particularly costly, as they cover expenses for system recovery, ransom payments, legal fees, and even fines for compromised customer data.
Additionally, beyond traditional cyber threats, larger-scale tech outages can cause severe interruptions to business productivity. Cyber insurance is crucial because of its frequency, but also because it is not always covered under standard commercial policies.
5. General Liability Business Insurance Claims
Liability claims are among the most common and costly risks to Canadian businesses. Liability claims are actually about instances where a third party suffers an injury or property damage as a result of your business operations. One typical example is a slip-and-fall accident. In this case, your business may be required to cover various fees. General liability insurance helps to protect businesses from unexpected costs like medical bills, coverage for damages, and, when needed, coverage for legal defence.
6. Professional and Product Liability (Errors and Omissions)
While professional liability claims are less frequent than some of the others on this list, they can be financially costly. This claim is filed in the case that a business’s expertise/services face charges of negligence, a failure to deliver, or a mistake in the work promised. In Canada, this type of claim is most commonly filed by businesses in sectors such as consulting, finance, technology, legal services, and healthcare. Therefore, for these types of companies, it is crucial to have Errors and Omissions coverage.
7. Trade Export Business Claims
As global trade becomes more unpredictable, Canadian exporters who rely heavily on American markets are becoming increasingly exposed to non-payment risks from out-of-country customers. While historically overlooked, trade credit and export claims are becoming increasingly relevant and are being filed more frequently. Furthermore, with strains on supply chains and continued tariff volatility, trade export coverage is becoming increasingly relevant for maintaining financial stability.
Common Business Insurance Claims: Conclusion
While no company can eliminate risk, understanding the most common business insurance claims in Canada helps owners predict and prepare for the unexpected. By combining coverage with proactive risk management, Canadian businesses can safeguard their finances, protect their reputation, and focus on long-term growth with ease.
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