For many small and medium-sized business owners, insurance is a line item to be minimized. They know they need it – because the landlord requires it, or because it simply feels like the “responsible” thing to do – but when it comes time to choose a policy, the cheapest option often wins.
According to TD Insurance vice-president of small business insurance, Tang Trang (pictured), that instinct is understandable, and even dangerous. “Business owners have cost pressure,” he said. "One of the things they look at is saving on insurance".
In practice, that can mean playing with deductibles, lowering policy limits, or stripping out optional coverages to shave dollars off the premium. On paper, nothing seems amiss: the business stays compliant, the certificate of insurance is in place, and the owner immediately sees savings flowing to the bottom line.
“It’s almost a trade-off between having resilience and protection for the future of the business versus an immediate gratification,” Trang explained. “By selecting less coverage or a higher deductible, you save costs, you get that gratification immediately. And that’s real, going to the bottom line – they see that.”
The problem only comes into focus when something goes wrong. Trang points to hospitality businesses as a clear example. In a normal year, a restaurant might carry a standard $2 million liability limit and feel adequately protected. But during an event like the FIFA World Cup, with packed patios, longer hours, and heavier foot traffic, that same limit may suddenly look thin. The chances of slip-and-fall incidents, crowd-related injuries, or third‑party claims all rise with the surge in customers.
“The exposure might be greater due to certain circumstances that might lead to a greater chance of liability risk,” he said. The guidance is there – but the final decision, he stressed, remains with the business owner.
And often, owners still opt to pare back protection. The trade-off feels rational in the moment because the benefit is immediate and visible, while the risk is abstract and distant. “We see this all the time,” Trang noted. “The trade-off is made because you can see the impact on the bottom line today. It’s only when there’s a claim that they realize the gap.”
He sees a similar pattern with business interruption coverage. Take a retail clothing store: on paper, it “needs” liability, property, and contents coverage to satisfy landlord or lender requirements. Business interruption, meanwhile, can look like an expensive extra. “They may save a couple of hundred dollars a year by not having business interruption,” Trang said. Then a fire breaks out in a neighbouring unit, or a water leak forces them to close for weeks. The property damage may be covered, but the lost income and ongoing expenses are not — and that’s when the true cost of the cheapest option is revealed.
“At the end of the day, if it doesn’t come from insurance, it comes from somewhere,” Trang said. “Where do they get the financial compensation?”
As Trang looks across TD Insurance small-business book, he sees clear patterns emerging in how owners buy coverage – and where gaps tend to appear.
On one end of the spectrum are entrepreneurs who prioritize convenience and speed. “Some prefer to have a quick insurance policy delivered very quickly,” he said. For straightforward risks and very small operations, that can work – up to a point. But as a business grows in size or complexity, that “fast and easy” approach can leave critical exposures unaddressed.
“What we see is that as the business gets more complex, there’s often more exposure,” Trang explained. In those cases, trust and advice become central to good decision-making. Owners want to know that the person on the other end actually understands their operations – the premises they occupy, the services they provide, the contracts they sign – and can speak plainly about what different coverages do and don’t protect. “They want to make sure that the person advising them understands their business and is able to provide the guidance on the coverage they need. It's important to gain that trust before they can move forward."
That need for trusted guidance only intensifies as the stakes rise.
“It tends to be more important as the business gets bigger,” Trang noted. When larger sums are involved – higher limits, more assets, more employees – owners become more conscious of both the cost they are bearing and the downside risk they are trying to manage. They may still want competitive pricing, but they are less willing to gamble on bare-bones protection. This is where having access to a licensed advisor “comes into play,” Trang said, to help align protection with the real-world risks the business faces.
