In today’s fast-moving business environment, risk is constant. For companies in Calgary and across Alberta, a single claim can threaten the bottom line, reputation and operational future of an enterprise. That is why commercial liability insurance deserves the attention of every business owner, financial planner and executive team.
Why liability insurance matters
From a brokerage perspective, the value is foundational. Chris Sikorski, CRM, managing partner at Magna Insurance Group, says commercial liability insurance is the base of a company’s risk-management strategy.
“In today’s environment where litigation, regulatory scrutiny and public accountability are at all-time highs, one claim can derail years of hard work,” Sikorski says. “For many Alberta businesses, particularly in construction, real estate, oil and gas or manufacturing, exposure exists on every project site and in every contract signed. Liability coverage does not just protect balance sheets, it safeguards relationships, reputations and the ability to operate after an unexpected event.”
He notes that general liability coverage protects against third-party bodily injury, property damage and personal injury claims arising from business operations. “In Alberta, we frequently see claims related to property damage, slip and fall incidents, water damage and defective work allegations,” he says. “Clients also face contractual liability exposures where project owners or developers transfer risk through these agreements.”
A common misunderstanding, Sikorski adds, is assuming insurance covers everything. “Liability insurance is designed for third-party losses, not contractual performance issues. Many businesses underestimate their exposure and assume minimum limits will suffice. Even a moderate claim can exceed $1 million once legal fees and settlements are factored in.”
He explains that standard policy limits have increased significantly over time. “Average general liability limits were $1 million approximately 10 to 15 years ago,” he says. “Since then, they’ve increased to $5 million. One million is typically the minimum limit available in the marketplace. For context, the majority of our clients purchase limits in the $5 million to $10 million range.”
Integrating coverage into financial strategy
From a financial-planning perspective, liability insurance protects long-term goals, not just compliance obligations. Blake Griffith, CFP®, president of Griffith and Associates Estate and Financial Planning at Sun Life Financial, says it is one of the key tools that shields future plans from disruption.
“Even if I am not the one selecting the policy, I make sure clients understand that one lawsuit or negligence claim can disrupt cash flow, financing plans or succession strategies,” Griffith says. “It is about preserving financial stability when something unexpected happens.”
He emphasizes the strategic upside. “Well-structured coverage supports business continuity, strengthens borrowing credibility and keeps the business in good standing with partners and suppliers,” he says. “The biggest benefit is risk transfer: instead of absorbing a major, unpredictable loss on the company’s balance sheet, you shift it to the insurer and protect your future plans.”
He adds that helping businesses find the right coverage starts with clarity. “Every business has different exposure, so the starting point is clarity,” he says. “From there, I coordinate with insurance professionals to make sure the coverage reflects reality, not assumptions.”
Emerging risks and shifting industry trends
Liability insurance is evolving alongside risk. Anne Klefner, PhD, professor and chairholder of risk management and insurance at the Haskayne School of Business (Haskayne), says insurers are adapting coverage to limit their own exposure to increasingly probable or correlated losses.
“Liability insurance will evolve to address new risks, and insurers will also adapt the coverage they provide,” Klefner says. “As AI use grows, negligent-advice and model-failure arguments will be asserted in liability claims. There will also be more blurring of lines between coverages, such as professional liability and cyber.”
Coverage for risks that are becoming more severe or frequent may only be provided with new exclusions or reduced limits, she adds. “Insurers will ensure policy wordings are tight and include exclusions, such as litigation-funding or cyber-related language.”
Martin Halek, PhD, associate professor of risk management and insurance at Haskayne, agrees. “As courts continue to broaden the scope of an organization’s liability, the desire to transfer the financial responsibility of that risk to an insurance company only increases,” he says. “For example, consider the evolution of cyber insurance. While it covers first-party losses such as data restoration, business interruption and legal fees, it can also cover third-party liability, like lawsuits from customers impacted by a cyber-attack.”
Technology brings both risk and opportunity, he adds. “While AI might be used to create fake or exaggerated losses, this same AI technology can be used by insurers to investigate these losses. It also helps with administrative efficiency, from policy creation to claims processing.”
Sikorski says cybersecurity and digitalization have shifted conversations across the industry. “We are seeing a higher demand for cyber, professional and management liability coverage as businesses expand their use of technology.”
Balancing cost and protection
“Every business has its own risk fingerprint,” Sikorski says. “At our brokerage, we start with a deep dive into operations, how the business generates revenue, what exposures exist, balance-sheet strength and what contractual obligations it assumes. From there, we build customized, premium-efficient programs that combine insurance and risk management to address those exposures.”
He cautions against focusing on cost alone. “Insurance is not about buying the cheapest premium, it is about managing your total cost of risk,” he says. “The lowest premium can become the most expensive decision if a claim is not covered properly.”
Griffith agrees that balancing cost and protection starts with understanding risk tolerance. “I look at how much disruption the business could withstand if something went wrong,” he says. “Some owners are comfortable taking on more retained risk, others want maximum insulation. My goal is to align coverage with their financial resiliency, not fear or guesswork.”
He recommends reviewing coverage annually or after major operational changes. “Businesses evolve, and coverage should evolve with them,” he says. “Even a brief structured conversation once a year can reveal meaningful gaps.”
A proactive mindset pays dividends
Legal liability risks exist for every business, regardless of size or industry. Litigation costs can quickly erode a company’s financial strength. While not always mandatory, commercial general liability coverage is often required by landlords, lenders or clients. Regular risk assessments, safety controls and experienced brokers reduce exposures and improve insurability.
“When the perspectives of the broker, financial planner and academics align, a consistent message emerges: commercial liability insurance is far more than a standard line in the budget, it is a strategic tool that underpins resiliency, credibility and continuity,” Sikorski says.
“We are entering an era of data-driven underwriting and proactive risk management,” he adds. “Insurers are using predictive analytics, AI and IoT data to price and prevent losses more accurately. Environmental and climate-related exposures are also driving new liability products, especially in construction and real estate.”
Griffith reinforces the business-value proposition. “If this worst-case scenario happened tomorrow, could you absorb it without derailing everything else you are building?” he asks. “If the answer is no, that coverage is not an expense, it is financial protection.”
Klefner agrees. “As risks change, insurance changes. New risks such as technology, climate and supply chain challenges need new or different insurance coverage.”
For Calgary businesses, the takeaway is clear: take inventory of exposures, engage trusted advisers and review liability coverage with the same rigour as your growth strategy. The cost of not doing so may extend far beyond the premium and could jeopardize the very future you are planning for.