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Commercial Insurance 101: An Introduction

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What Is Commercial Insurance?

You’ve worked hard to build a successful business—which is why you need to protect it with commercial insurance. Commercial insurance makes sure that all the effort and money you have invested in your business is covered in case a natural or financial disaster strikes. 

How Commercial Insurance Works

Commercial insurance is an agreement with an insurance company where you pay a set monthly or annual premium for them to assume liability for damage to property or people. Depending on the type of insurance policy, it can step in to help cover costs you’d otherwise be responsible for.

4 Types of Commercial Insurance to Consider

We recommend these four types of business insurance coverages.

Commercial Property Insurance

Commercial property insurance covers costs to repair or replace the property that you operate your business in or lost or damaged equipment or inventory. This policy covers the building structure itself, as well as business personal property such as equipment, inventory, furniture, and more. Covered perils usually include loss from fire, storms, theft, burglary, or vandalism. It typically excludes coverage for damage from flooding. If you live in a flood zone, consider purchasing a flood insurance policy.

General Liability Insurance

General liability insurance covers your business if you're accused of third-party bodily injury, third-party property damage, and advertising injury (libel, slander, copyright infringement, etc.). It will pay settlements to third parties resulting from anything for which your business is legally liable, up to the policy limits, as well as defense costs and legal fees associated with the claim. It also covers any medical bills for any people injured by your business.

Commercial Auto Insurance

Commercial auto insurance provides coverage for autos owned by your business. This insurance pays any costs to third parties resulting from bodily injury or property damage for which your business or employees are found legally liable, up to the policy limits. Depending on what kind of coverage you buy, the insurance may pay to repair or replace your vehicle because of damage resulting from accidents, theft, flooding, and other events.

Workers’ Compensation Insurance

Workers’ compensation insurance—often shortened to workers’ comp—pays for medical bills and replaces a portion of lost wages for an employee who was injured while doing their job, regardless of who was at fault for the injury. It also helps protect the business from a lawsuit from the injured employee. Workers' compensation is required—in most states—if you hire employees. You'll likely be required to get disability and unemployment insurance for your employees as well.

Other Insurance Policies for a Business Owner

In addition to the basics highlighted above, there are various other business insurance coverages to consider.

Commercial Umbrella Insurance

Commercial umbrella insurance policies provide coverage over and above your other liability coverage limits. They are designed to protect against unusually high losses. Some umbrella policies also include coverage for things excluded by underlying policies.

Professional Liability Insurance

Professional liability policies are designed to meet the specific needs of individual businesses that offer professional advice in the course of their jobs. It can also apply to professions that face high costs if they make an error. This group of insurance can include errors and omissions insurance (E&O), employment practices liability insurance (EPLI), and directors and officers insurance (D&O).

Business Owners' Policy

A business owner's policy is a package that insurance companies usually offer small businesses at a discounted rate compared to purchasing each policy separately. It usually includes general liability, commercial property, and business interruption insurance. Business interruption insurance helps cover costs if you're unable to operate your business. Those costs can include lost income, employee payroll, taxes, debt repayment, and other operating expenses.

How Much Does Commercial Insurance Cost?

Business insurance costs vary depending on the type of coverage you choose, how many employees you have, whether you own or rent a building, and even the type of company you own. Because the costs vary so widely and depend on numerous factors, we always recommend talking with insurance carriers help you determine your business risk and get a quote for accurate coverage.

Learn More About Commercial Insurance Coverage

Navigating the world of commercial insurance and determining your business's needs can be tricky. We always recommend speaking with your agent about the coverage your business may need. If you need help assessing your business risks, need more information, or would like helping getting coverage, give us a call at 877-907-5267. Or, complete the form at the top of the page for a simple, free quote.

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Related Pages: Commercial Insurance, What is Business Insurance?, What Is Commercial Insurance?

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