Navigating the complex world of commercial insurance can be one of the most challenging aspects of managing a business. Due to the variety of specific business needs or industry-related concerns, commercial insurance exists in many different forms.
Commercial insurance is essential for any business, regardless of industry or size, because it limits risk. A lot can go wrong in day-to-day business operations. Without commercial insurance, the company and its owners may have to pay out-of-pocket for damages and legal claims arising from unforeseen incidents.
In this piece, we’ll take a close look at what commercial insurance is and the types of coverage available to address the short- and long-term needs of any business.
What Is Commercial Insurance?
Commercial insurance is an umbrella term that covers the various types of insurance a business might need. Commercial insurance is specifically aimed at protecting the reputation, well-being, and financial health of your business and your employees.
In contrast to personal insurance, commercial insurance covers an organization, its owners, and its employees. Plans are usually structured to cater to your company’s specific industry and daily activities. For example, personal insurance plans, such as auto or renters insurance, can have a one-size-fits-all approach.
Types of Commercial Insurance
A few of the most common types of commercial insurance include:
General Liability Insurance:
General liability insurance is designed to cover potential medical costs and any legal fees that follow.
Commercial Property Insurance:
Commercial property insurance helps protect your company’s owned or rented building and equipment it needs to operate.
Business Interruption Insurance:
Business interruption insurance provides coverage to protect your business during covered incidental events. This type of coverage will replace the money you would have made in a given timeframe or provide funds while you operate in an alternate location.
Typically, insurance companies selling business insurance offer policies that combine protection from all major property and liability risks into one package. Purchased by most small and mid-sized companies, a business owners policy (BOP) usually covers all three coverage types named above. Larger companies, on the other hand, typically tailor policies to meet the unique risks that they face.
Workers’ Compensation Insurance:
Workers’ compensation insurance extends your employees’ benefits if a work-related injury or illness occurs.
Commercial Auto Insurance:
Commercial auto insurance protects you and your employees on the road if you drive business-owned vehicles for work.
Employment Practices Liability Insurance (EPLI):
Any business can receive employment-related claims just as it would receive general liability or property claims. EPLI protects businesses against employee lawsuits that propose inappropriate and unfair acts.
Cyber liability insurance provides coverage for particular losses occurring from data breaches or related events.
Errors and omissions insurance protects a business from the consequences of an error made by an owner or employee that results in a lawsuit. If you provide a service for a fee, we highly recommend that this is something that you look into.
What Types of Commercial Insurance Are Required for My Company?
In many cases, you are legally required to purchase certain kinds of commercial insurance.
Federal regulations in the U.S. generally require every company with employees to have workers’ compensation. Likewise, state regulations mandate a certain amount of insurance for your business. These typically include general liability coverage for lawsuits and commercial property insurance for workspaces and equipment.
Insurance requirements vary by state, so visit your state’s commerce website, and speak with an insurance broker for additional insight.
Keep in mind that commercial insurance can also be referred to as business insurance. Both terms are simply different ways of describing the same thing—insurance policies that provide coverage to businesses.
Want more relatable content? Check out more exclusive content on the Mployer Advisor blog, or read on for our comprehensive guide on small business insurance.