September 26, 2020

Keep Your Business Safe: What Is Commercial Insurance?

From the California Business Journal  Newswire.

Roughly 75% of all small businesses are underinsured by 40% or more. That means that they don’t have adequate coverage to protect their businesses in times of trouble.

The world of insurance can be daunting to navigate, and it’s easy to think that you have enough insurance because you have a commercial insurance policy.

What is commercial insurance? Keep reading to learn what commercial insurance is, the types of policies for businesses, and how you can get the coverage you need.

What Is Commercial Insurance?

Commercial insurance is a suite of insurance products to protect businesses from lawsuits, theft, property damage, and natural disasters.

You might be thinking, “Why do I need commercial insurance?” As a business owner, you always want to watch your expenses. Here’s what happens if you don’t have commercial insurance.

Let’s say that you have a client visit your business. You just mopped the floors, and they slipped and fell. They sustained an injury that required medical attention. They can file a lawsuit against your business to cover medical expenses and lost income.

Normally, this type of case would settle out of court and your business insurance would pay for the settlement costs. Without insurance, your business is exposed, and you’d have to pay out of pocket for such issues.

If you work at home, don’t assume that your homeowner’s coverage will be enough to cover you. It’s not. Most homeowner policies will not cover your home-based business. You’ll need to have a separate commercial insurance policy or a rider attached to your homeowner’s policy.

Types of Commercial Insurance

Since businesses have so many different needs, there’s not a blanket commercial policy that covers everything. Instead, there are different types of commercial insurance policies that you can mix and match to your needs.

These are some of the most common types of business insurance to look for.

Business Interruption Insurance

Business interruption insurance is a hot topic these days. Thanks to COVID-19, many businesses had to shut down to curb the spread of the disease.

This type of insurance will help cover your lost income in case it had to stop operations. However, you need to read the fine print of the policy to understand what is covered.

In the case of COVID-19, businesses that had business interruption insurance had claims denied by insurance companies. You can expect that changes to these policies and lawsuits will happen. This is something that you want to be aware of when you sign up.

Cyber Insurance

Did you know that there is a specific insurance policy that covers you in the event of a data breach? That’s what cyber insurance does.

Any business that operates online or stores sensitive data on customers should have this type of insurance. This will cover your business for losses related to the data breach, such as providing customers with ID theft protection services.

These policies are generally geared towards larger businesses. You want to be sure that you have a policy that provides enough coverage that’s appropriate for your business.

General Liability Insurance

This is the type of insurance that many people think of when they hear commercial insurance. Liability insurance covers things like bodily harm if someone falls at your business.

You could also be held liable if you or one of your employees damages the property of a customer. General liability insurance will cover you in that case.

Errors and Omissions Insurance

This is a little different than general liability. Errors and omissions insurance is also called professional liability insurance. This applies to service providers that give advice.

Accountants and real estate agents use this policy to guard themselves against lawsuits that stem from errors you may have made while serving clients.

Property Insurance

If you own or rent a business property, then a commercial property insurance policy is a must. The building, the equipment inside the building, and any major fixtures outside the building (signs, fences) are covered.

What many businesses do is they have a business owner’s policy, which combines general liability and commercial property policies into one policy.

How to Have Enough Insurance Coverage

The types of policies above list only some of the major and emerging types of commercial insurance policies. If you have employees, you need workers’ compensation insurance. If you have company-owned vehicles, you need commercial auto policies.

As you can see, you can easily expose a major part of your business by assuming that you have enough insurance coverage. How can you be sure that you have enough commercial insurance coverage?

Start by doing a risk audit of your business. Insurance companies will often perform risk audits to determine your premium rates. The higher the risk you have, the higher your premiums will be.

During the course of the audit, you may find that there are things that you need to correct to limit the amount of risk. For example, you may have a lot of wires and cords around your place of work. This can pose a slip and fall hazard, and you’ll have to file a liability claim if there’s an incident.

You also want to sit down with a commercial insurance professional who can help you go through each aspect of your business and find policies that you need. You can learn more about the different policies and how to mitigate your risk here.

Don’t make the same mistake that many other business owners make. They look at the policy based on what the monthly premium is, not what the overall coverage is. It’s well worth it to pay a few more dollars each month.

Don’t Overlook Commercial Business Insurance

You worked hard to build up your business. You don’t want to lose it because you didn’t have commercial insurance or you didn’t have the right insurance policy in place.

What is commercial insurance? It’s a way for you to protect your business from unexpected events and mishaps. Without the right insurance coverage, your business could face significant losses.

Get the right insurance policy for your business by auditing your risk and working in with a commercial insurance professional. Your business will be covered and you’ll get peace of mind.

For more information about business insurance, check out the Business Insurance section of this site.

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