Small businesses avoid using insurance: TD survey

The majority of small business owners in the Prairies have insurance coverage, but nearly half avoid using it when faced with an emergency, according to a new poll by TD Insurance.

The survey found that 88 per cent of small business owners in the Prairie provinces said they have insurance, yet only 48 per cent would actually use it in a crisis.

Instead, many would turn to more expensive financing options such as bank loans, credit cards or cashing out savings or investments. Nearly four in 10 would turn to family or friends for financial support.

The trend is consistent across the country but more pronounced in the Prairies, Tang Trang, small business insurance vice-president for TD Insurance, told the Sun.

“It’s surprising, given that insurance is meant to make business owners more resilient in case of an emergency,” Trang said. “Even though many Prairie business owners have insurance, about half of them would rather turn to other financing options when the unexpected happens.”

Trang said the findings suggest a potential “knowledge gap” — that while small business owners are diligent about buying insurance, many may not fully understand how their coverage can protect them or how to make use of it effectively.

The survey also shows a shift in the top concerns among Prairie business owners. Almost one in three (32 per cent) identified rising operating costs as their biggest challenge, while 26 per cent pointed to difficulty scaling their business.

By contrast, fewer are worried about marketing and attracting new customers (16 per cent compared to 21 per cent in B.C., 29 per cent in Ontario and 24 per cent in Quebec), though more are focused on maintaining customer satisfaction (32 per cent versus 23-26 per cent in other provinces).

Trang said that compared to last year, when growth and expansion were the top priorities, this year’s survey reflects a more cautious mindset.

“Business owners are more focused on managing expenses rather than growing revenue,” he said. “That shift could also influence their approach to insurance.”

Cutting corners on insurance could leave businesses exposed when emergencies occur, he said.

“Managing expenses shouldn’t come at the expense of protection,” he said. “If business owners rely only on basic insurance, they may find themselves underinsured and forced to turn to costlier alternatives.”

Small business owners need to treat insurance as a “proactive tool” rather than a reactive measure, especially heading into the year’s final quarter — typically a peak period for many businesses, Trang said.

“As businesses grow, their insurance needs evolve,” he said. “They may have more inventory, equipment or staff, and the coverage they bought initially might no longer be adequate. Reviewing and updating their policies ensures they’re protected at all times.”

He cited a recent Manitoba example where a small business operating out of a homeowner’s basement suffered fire damage. Because the owner had both home and business insurance, they were able to quickly recover operations through business interruption coverage.

“Without that, the owner might have faced weeks or months of downtime,” Trang said. “Insurance helped pay rent, replace equipment and get back on their feet faster.”

Trang also acknowledged that some small business owners avoid using their insurance because they perceive the claims process as time-consuming, though that may not be the case.

“Don’t just buy insurance — understand it, update it and use it. Talk to a licensed insurance advisor to make sure your coverage keeps pace with your business. That’s how you build real resilience.”

The poll was conducted by The Harris Poll Canada on behalf of TD from July 10 to July 15, with a total of 400 small business owners and senior decision-makers.

It is deemed accurate within a margin of about plus or minus five per cent 19 times out of 20.

» aodutola@brandonsun.com

» X: @AbiolaOdutola