What Is Commercial Insurance?

Commercial Insurance

Commercial insurance, also known as business insurance, protects the business from various types of losses and accidents that can cause a catastrophic financial blow to the business. Business insurance covers business owners and employees. Typically, a commercial insurance policy is written to cover businesses against accidents, lawsuits, and property damage. Each type of business has unique exposure areas, so it is important to speak with a knowledgeable agent who can ensure your business covers any type of disaster.

Most commercial insurance policies include basic coverages such as property damage, general liability, crime, cyber crime, equipment failure, business interruption, auto and business compensation, which are required in most states. Sometimes surety bonds are also required for contractors, to ensure that the construction contract is honored and that the contractor follows all government rules and regulations. Bail bonds are also used to protect against theft.

Often times, multiple coverages are combined into one Business Owner Policy (BOP). Generally, coverage includes commercial property insurance, general liability insurance, and business interruption insurance. However, not all companies qualify for the employer policy. Most insurance companies do not cover companies with a BOP unless they operate in a brick and mortar building. Some businesses that qualify for the BOP include retail stores, apartment buildings, small restaurants, and businesses with offices.

If you are running a home business, you probably don't qualify for a BOP, but you should make sure to purchase home business coverage or liability insurance. Workers' compensation is required in most states, if you have employees.

Is Commercial insurance required?

If you have employees, you must have workers 'compensation in most states, but there are no federal workers' compensation regulations. Most commercial insurance is optional. However, it is important that you have a property and casualty insurance policy along with a workers' compensation policy.

What is commercial insurance coverage?

Liability insurance (professional liability insurance)

This coverage covers the costs related to claims against your company in case of errors in the provision of your services.

Business interruption insurance (business income insurance)

This coverage replaces lost income if you have to temporarily close due to a covered loss, such as theft or property damage from a covered peril. It can also help pay for expenses when replacing or repairing your property.

Commercial property insurance

This coverage protects the building and personal property associated with the business. The following are generally covered: equipment, furniture, and inventory.

Workers compensation insurance

Often times, this coverage is necessary if you have employees. Covers employees who are unable to work after suffering a work-related injury or illness. If an employee files a lawsuit against the company, the workers' companies can help cover the cost of legal fees.

Commercial auto insurance

This type of coverage protects your business from the costs of work-related car accidents. If your worker uses a car for business purposes, such as meeting with clients, or owns a fleet of vehicles for business purposes, you will need commercial auto insurance.

Data breach insurance (electronic insurance)

This coverage protects your business from cyber threats or attacks. If you are attacked, your insurance company will cover the cost of finding the source of the violation and avoiding further damage. Most insurance companies offer prevention and reputation management training.

Commercial flood insurance

This coverage protects against the costs covered by flood damage. This coverage is separate from commercial property insurance. Flood damage will not be covered by commercial property insurance. Commercial flood insurance will cover damages and losses.