Survey: A Shocking Majority of Canadians Would Sue a Small Business

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The results highlight the heightened risks confronting Canadian small business owners and independent professionals. Notably, a 2023 survey found seven out of 10 Canadian small business owners had to deal with a legal dispute in the past three years, representing a 230% increase from 2015.

A single lawsuit – even a frivolous one without merit – can cost a self-employed professional, side hustler, or business owner thousands of dollars to defend themselves.

A comprehensive commercial insurance policy can help protect business owners from a broad range of expensive damages, including the threat of legal action against them.

Top 5 Legal Threats Business Owners Face

A combined total of 83.2% of Canucks think that Canadians are more likely (55.2%) or may be 

more likely (28%) to sue a business now than five years ago.

The top five reasons respondents say they would sue a small business if they didn’t have to pay a lawyer unless they won the lawsuit include:

1. Suffering an injury after an auto accident with a business vehicle: 14.86%
2. Suffering an injury or property damage from a product they bought: 14.67%
3. If a small business or contractor made a mistake that damaged their property: 13.68%
4. Suffering an injury after a slip and fall on a business’s premises: 13.07%
5. If a health and wellness practitioner’s advice or treatment caused them pain or money: 10.70%

Other top reasons consumers would take legal action against a business owner or self-employed professional include:

• If they experienced food poisoning or an allergic reaction from food they bought (9.40%)
• If a spa or beauty salon practitioner’s advice or treatment caused them pain or money (8.66%)
• If a small business suffered a cyber-attack and their confidential info was stolen (7.66%)

Of note, when asked if they’ve ever chosen not to pursue legal action against a small business out of concern for a business owner’s financial stability, 69.8% say ‘no’. This finding indicates business owners cannot rely on apologies or offers of discounts to appease customers who feel they were wronged in some way.

Not ‘Un-Canadian’ But Not American, Either

While most of our survey’s respondents (67%) don’t think it’s ‘un-Canadian’ to sue a business owner, 66.9% think Canadians are less likely to launch a civil lawsuit against a small business owner than Americans are. 

Most respondents (58.8%) also say they would openly discuss a legal action they are taking against a business with friends, family, and colleagues, highlighting how negative word-of-mouth opinions consumers share with others could be detrimental and lead to a loss of business.

Interestingly, when asked in which province they think lawsuits against small businesses were most likely to occur, more than half of respondents say Ontario (51.2%), distantly followed by Quebec (15.5%), Alberta (11%), and British Columbia (10.3%).

Consumers Say Insurance for Businesses Is Critical

When we asked Canadian consumers how important it is for small businesses to have insurance to protect themselves from potential legal claims and other liabilities, a combined 96.4% say it’s ‘very important’ (79.7%) or ‘somewhat important’ (16.7%). Fewer than 2% say it’s ‘not important’ or ‘not at all important’. 

This finding highlights how not having an insurance policy and a certificate of insurance to show customers could hurt a business’s bottom line. It also suggests respondents believe small businesses are at risk of being sued.

Moreover, this result contrasts the 48% of business owners in the 2023 Zensurance Small Business Confidence Index survey who said they didn’t have insurance because they didn’t believe there was potential for costly losses or damages to their businesses.

Other noteworthy findings include:

• 50.5% say they would sue a small business if a family member were injured in a car accident involving a commercial vehicle; 35.6% say they might take legal action
• A combined 77.3% would sue a business after a slip-and-fall accident that injured a family member
• A combined 83.6% say Canadians are more likely to steal from their employers because of the state of the economy

How Business Insurance Can Help Protect Your Business From Lawsuits and Liabilities

There are many reasons why business owners should have insurance to preserve their financial wellness and safeguard their assets.

Different types of insurance are designed to cover various liability risks. For example:

• General liability insurance covers third-party bodily injury and third-party property damage caused by your business’s regular activities or due to a slip-and-fall accident.

• Professional liability insurance, or errors and omissions (E&O) insurance, covers claims alleging professional negligence or wrongdoing that causes a customer financial or reputational harm.

• Commercial auto insurance covers damages to your business vehicle or any vehicle used for business purposes. A private-passenger car insurance policy does not cover commercial vehicles if involved in a collision.

• Cyber liability insurance covers financial losses from a data breach or cyber-attack that compromises your business’s technology systems and customer data. 

• Commercial crime insurance covers a business owner’s financial losses resulting from business-related crime, including internal theft by employees, forgery, robbery, and electronic crime.

There are other types of liability insurance your profession or business may require. Speak to a licensed Zensurance broker if you have questions about protecting your finances and reputation from damages, losses, and legal claims against you.

Fill out our online application for a free insurance quote. Our knowledgeable brokers will shop our partner network of over 50 insurers to get the low-cost coverage your business needs and customize it to suit your risks and budget.

About the Survey

Zensurance conducted an online survey of 1,000 Canadian consumers from February 16 to 19, 2024.