Thanks to our years-long experience, we are well familiar with the concept of commercial insurance and all its implications on your business.
Here, you will be able to find useful and actionable information about commercial insurance. Our goal is to help you match your business type and size with the right commercial insurance.
Getting an insurance policy for your business is one of the most important decisions you will make. It can make a huge difference. Commercial insurance should be there to back up you and your company in the case of an unforeseen circumstance.
Fortunately, we are very well familiar with these unforeseen circumstances and will share this valuable information with you.
What is Commercial Insurance
In the world of insurance policies, commercial insurance is a term reserved for business insurance. You can consider it a synonym for business insurance. To avoid confusion, many insurance houses call it commercial insurance for business.
Its primary purpose is to protect businesses and cover some of the most common losses. These losses can arise from injury to employees or damage to property.
Commercial insurance for business, in its most basic form, encompasses public and employers’ liability policies. But these are just two of many commercial insurance covers available to business owners. We are going to cover all of them in a separate section.
How Commercial Insurance Works?
Commercial business insurance is a binding contract between your company and an insurance company. When you sign the contract with an insurance company, the insurance company agrees to share your business risk in exchange for premium payments.
If a circumstance results in a loss that is covered by the commercial insurance, the insurance company will pay for the financial losses your company incurs. The limit of the premium payment is defined in the contract, and an insurance company will cover the losses up to this limit.
Once your business goes through an event of a covered loss, you can initiate the process by filing a claim with an insurance company.
Let’s say a fire breaks up in your offices, and there is substantial property damage. To leverage the insurance policy, you will have to file a claim against the property insurance policy.
As soon as the insurance company receives your claim, an adjuster will visit your premises to assess the damage and process the claim. The final step of the process is receiving the appropriate amount of compensation for the loss.
The Cost Of Commercial Insurance
As every business is unique, so is the cost of commercial business insurance. There are many factors in play here, making it unable to point the finger at the exact how much will commercial insurance policy cost you. The most important factors that affect the cost of business insurance are:
- Business type
- Size of a Business
- Range of business risks
- Types of coverage
- The total number of policies in the commercial insurance package
For instance, a small business such as the home-based ones can be insured for approximately $500 per year. On the other hand, business insurance for a large company with many employees can easily go up to $200,000 per year. Why?
Because a small business doesn’t face as many business risks as big corporations do and thus a small business will get business insurance with only a couple of coverages.
However, not getting a policy for a viable risk can result in an expense that you can not cover on your own and might easily cause you to close the doors of your establishment, which brings us to the next section.
Why Is Getting Advice On Commercial Insurance Important?
Getting advice on business insurance is extremely important, especially if you don’t have any previous experience with this topic. As a business owner, you have to do everything in your power to protect your business. But you can do little about it when you don’t know all the risks you are involved in.
An experienced professional dealing in business insurance will help you assess your business risks and choose the right type of insurance for your industry and your business specifically. By doing so, you will face all the risks head-on and secure the future of your company.
Commercial Insurance and Law
Getting commercial insurance for some business owners is not a matter of choice, it’s an obligation under the state law. And, there are certain conditions under which commercial insurance is required by law. Let’s explore all of them, so you know which coverages are a must-have.
Workers Compensation Insurance
While workers’ compensation laws vary from state to state, the chances are that you are legally obligated to carry workers’ compensation insurance. Businesses that have employees can carry workers’ compensation insurance in several ways:
- Through a state worker’s compensation program
- Through a commercial insurance carrier
- On a self-insured basis
Make sure to discuss this with your business insurance specialists. You should abide by the law of the state your business is registered in.
If you have work contracts stating that you are obligated to pay unemployment insurance taxes under specific conditions, you are legally obligated to register your company with the state work force’s agency and carry an unemployment insurance policy.
The disability insurance is required by law in New York, New Jersey, Hawaii, and California. Disability insurance enables you to have partial wage replacement coverage for employees with non-work related illness or injury.
Professional Liability Insurance
Professional liability insurance is legally required in some states. Make sure to double-check your state requirements to ensure the legality of your operation and to avoid paying unnecessary fines.
Business Insurance is Tax Deductible
Business insurance is tax-deductible. But there is one important thing to know before you invest in commercial insurance thinking that insurance premiums will reduce your taxes. However, for it to be tax-deductible, the coverage has to serve the purpose of operating your business, profession, or trade.
How Many Types of Commercial Insurance Are There?
There are well over 20 different types of commercial insurance. Investing in some of them would be a complete waste for some businesses.
Choosing insurance types appropriate to your specific business nature is essential. Also, don’t forget the commercial insurance types that you are legally obligated to carry. We already went through the insurance types legally required in some states.
Now, let’s see the other types of commercial insurance. We will start with the essential commercial insurance policies.
Business Owners Policy or BOP
Business Owner’s Policy is not one policy but a package of commercial insurance policies. It’s tailored to serve the general needs of businesses of all sizes and from various industries. Usually, it contains General Liability, Business Interruption, and Commercial Property insurance.
General Liability Insurance
General liability insurance is very often present in commercial insurance packages. Its purpose is to protect your business from claims of third party property damage or injury, advertising injury, product liability, etc.
Product Liability Insurance
As you can see, Product liability insurance is so detrimental that it is part of the BOP and general liability insurance packages. Product liability insurance protects your business from claims of property damage or personal injury caused by one of your physical products.
Professional Liability Insurance
Professional liability insurance is designed to protect businesses providing professional services (lawyers, doctors, architects, and more). It will protect a business from financial loss and claims of negligence as a result of mistaken services.
Business Interruption Insurance
Some events may cause a business to stop working. Business interruption insurance is there to compensate for the lost income and ongoing expenses if the business stops working due to an event covered by the policy.
Commercial Property Insurance
Some business owns their space while others lease it. In any case, it is important for a business to protect its physical assets and that exactly what commercial property insurance is for. Pay special attention to these policies, as most of them don’t cover damages as a result of a flood.
Commercial Auto Insurance
Commercial auto insurance is very similar to your private auto insurance. If your company owns vehicles you and your employees use, the commercial auto insurance provides various coverages ranging from liability and collision to medical payments and uninsured motorist coverage.
Hired and Non-Owned Auto Insurance
If your company doesn’t own buy allows employees to use their private vehicles or hires vehicles, this insurance will prevent a lot of headaches. It will protect your business from liability in case of an incident involving hired and non-owned cars.
Equipment Breakdown Insurance
The equipment in your facilities can breakdown for a variety of reasons, including electrical failure and mechanical error. If the event is covered by equipment breakdown insurance, you will be reimbursed for the costs of repairs, replacement, and for the lost income while the machines were down.
You can’t police your employees. But what you can do is protect your establishment from financial losses that follow dishonest or fraudulent acts of your employees. A fidelity bond will keep your business protected in case of such an event.
Custom-Tailored Commercial Insurance Package
We can not stress enough how important it is to address all the risks your company potentially faces. A commercial insurance package is tailored to meet the needs of a specific company.
Business Insurance Offers Recap
Business Insurance Frequently Asked Questions
Commercial insurance protects the business from financial loss. It consists of different insurance policies, each one addressing a specific business risk. Since every business is unique, for a commercial insurance policy to be good, it has to be tailored to specific business needs.
Flood insurance is a separate insurance policy. Commercial insurance package often contains a commercial property insurance policy, but it only covers very specific events in which water damages a property. If you live in an area where floods are regular, you should consider investing in a separate flood insurance policy.
To cover the cost of potential lawsuits, you have to carry appropriate business liability insurance. General, product, and professional liability insurance is often part of a commercial insurance package.
Companies that fear they won’t have enough liability coverage to pay the legal costs can extend the coverage by investing in a commercial umbrella liability policy.
There are well over 20 different commercial insurance policies. The chances are that you will have to carry those legally required by your state. Choosing the additional ones depends on the type and size of your business, industry-relevant risks, and specific risks your business faces.
Commercial insurance is required by law in some states. To stay on the legal side of doing things, you should consult a commercial insurance specialist and find out which commercial insurance policies you have to carry.