Commercial insurance is the life line of most businesses in difficult times, your business is in the red with a whole lot of debt and you are looking into commercial insurance. Although there are many different types for your type of business, what should be your first move?
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Most people will say that liability coverage is important but this may not provide as much protection as property damage or accident/bodily injury coverage would at an affordable price point. What other options do I have?
This article provides information on the most common types of commercial insurance. Your next move will be to decide which type is the most appropriate for your business.
What are the Most Common Types of Commercial Insurance?
Property Insurance
Property insurance is a type of insurance that covers the loss or damage to property. It may include boiler and machinery coverage in case a boiler or machinery breaks down. Debris removal insurance covers the cost of removing debris after a fire. Builder’s risk insurance covers buildings while they are being constructed.
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Business interruption insurance covers lost income and expenses resulting from property damage or loss. Inland marine insurance will protect you as a business owner if your stuff is in transit, while glass insurance protects against broken store windows and plate glass windows. Ordinance or law insurance reimburses you for lost revenue during a forced closure. It usually pays out from 50% of the cost of demolition and rebuilding to code, usually around $5,000
Liability insurance
No matter how careful a business is, accidents can happen. That’s where liability insurance comes in. This type of policy covers claims of injuries or damages caused by the business. For example, if someone trips and falls on your property while they are visiting, liability insurance may help cover the costs associated with that accident.
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Liability insurance could also help protect an enterprise in case of a lawsuit. For instance, if you are accused of libel or slander, having liability insurance may help offset some of the legal costs involved in defending yourself.
General liability insurance helps cover damages and injuries caused by customers or third parties on a company’s premises. If you need more insurance than your general liability policy offers, consider add-ons like malpractice insurance and errors and omissions coverage (E&O). These policies are important for businesses that operate online, as there is always a risk of potential lawsuits due to negligence or mistakes made online.
The average cost of General Liability Insurance was $741 in 2017. This number increased significantly for companies with a higher risk profile (i.e., landscaping or consultancies). However, General Liability Policies typically cost between $400 to $600 a year for small business owners.
Commercial auto insurance
If you own any vehicles, you need commercial auto insurance. This type of policy protects your business in case an employee is involved in an accident while driving one of your company’s cars. Business auto insurance typically covers the cost of damages up to a certain amount, and it might not cover damage done in an accident involving a personal car if it is used for business purposes only.
A few other types of commercial insurance are worth purchasing for your business, such as if you conduct services or sell products. For example, general liability insurance can protect you from lawsuits related to injuries that occur on your property. Car and truck premiums are higher than a bus, taxi, tractor-trailer, and most other types of vehicles. This is because the risks you face when driving a certain type of vehicle affect your insurance premium.
Workers compensation insurance
Workers’ compensation insurance is a type of commercial insurance that helps protect employees in case they are injured on the job. Workers’ comp policies cover injuries that occur during work and prevent employees from suing the employer.
Workers’ compensation laws protect the employer from lawsuits, which can be beneficial in some cases. For example, if an employee is injured while working and does not have workers’ compensation insurance, they may sue the employer. Having workers’ compensation insurance protects the employer from this risk.
What kind of business insurance do I need?
There are a variety of insurance options available, but some are more essential than others. At a minimum, every small business needs property insurance and liability coverage. Property insurance protects your business assets in case of damage or theft, while liability coverage provides protection if someone is injured on your premises or as the result of your business operations.
It is important to find an insurance company you can trust, then search for coverages specific to your industry. For example, if you own a restaurant, you’ll need liability and workers’ compensation coverage. If you’re a contractor, you’ll need general liability and contractors’ risk insurance. Nationwide offers information on small business insurance; call 1-888-490-1549 to speak with a representative about what kind of business insurance you need.
There are a variety of other types of commercial insurance available depending on the nature of your business: product liability, automobile insurance for company vehicles, professional liability (malpractice), directors and officers’ coverage, cybercrime and data breach protection,… the list goes on. It’s important to consult with an experienced agent who can help identify the right policies for your specific enterprise.
How much commercial insurance is needed for small businesses?
There is no minimum amount that you need, but the cost varies depending on your company’s needs and risks. For a small business, general liability insurance is a good place to start. General liability insurance covers lawsuits and property damage that could come from falling objects or personal injuries in your store. It can also help protect you from financial losses when your business is interrupted because of natural disasters, accidents or other events.
Commercial umbrella insurance provides liability protection for businesses that have reached their limits on other insurance policies. Commercial umbrella insurance can be used with a general liability policy and commercial auto policy. If you have employees, workers’ compensation insurance is required in most states.
Business interruption insurance pays for when your business breaks down because of natural disasters, accidents or other events causing financial loss to the company. This type of coverage is important for small businesses since they are more likely to suffer from an interruption than larger companies.
Policies with a smaller coverage limit will cost more than those with a larger one; the level of risk determines how much you pay for your policy. So it’s important to consider all potential risks before purchasing commercial insurance.
What is typically excluded from commercial property insurance?
There are a few things that are typically excluded from commercial property insurance. For example, you will need a separate policy if you want to cover an exclusion like “normal wear and tear.” The cause of loss exclusions typically falls under the categories of “flood, earthquake, terrorism, war and military action,” intentional damage or nuclear hazard.
Property insurance typically does not cover intentional damage or normal wear and tear. However, it does protect the business against destruction, the occurrence of theft and vandalism in addition to physical damage. As a business owner, it is important to be aware of these exclusions so that you can make the best decision for your company’s needs.
