Types Of Commercial Business Insurance

By Author: Frank Kasimov
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It's essential for most commercial businesses nowadays to have insurance. There are any number of risks that can affect a business and its operations, and consequently its profitability. It's often said that the larger the investment, the larger the risk. This is also true of businesses in that there are greater risk factors affecting a larger business. A commercial business will generally have a larger number of employees. It produces large volumes of products or services, and there are longer and larger work processes. This means that the risk of negligence, liability, defects and external factors affecting production is greater for a commercial business.

Insuring the Commercial Business Assets

Commercial Property Insurance looks at covering physical damage that may occur to a business premises. Examples include storm, flood and rain damage, fire, civil unrest and vandalism, and even computer network failure. There are two additional sub-categories of commercial property insurance that further define the risks. All-risk insurance covers a wide range of possible incidents. This is the more general type ...
... of policy. If, for your industry or business, there is the possibility of a higher-than-average risk in one particular area then you would take a peril-specific policy. Peril-specific policies only cover circumstances that you choose to specifically list in the policy. The advantage of this is that you are only paying for risks relevant to your business. The disadvantage is that if you overlook some risks and do not include them in the policy, you will not be covered. In general, most Commercial Property Insurance policies have a peril-specific clause rather than a more general all-risk type of policy.

Casualty Insurance is often combined with Property Insurance and these make some of the most comprehensive types of Commercial Insurance policies. Casualty insurance covers the loss or damage to the business which may result from property damage. This could be loss of stock, inability to continue operations, and similar scenarios.

Commercial Auto Insurance covers vehicles owned or used by the business for commercial purposes. This type of insurance covers any damage to vehicles in the event of an accident as well as injury to other persons or damage to other vehicles or property. Employees are notorious for being less careful with company vehicles so this type of insurance is essential if you have commercial vehicles on the road.

Internet or e-Insurance is a relatively new type of insurance created for businesses that operate on a web-based online platform. The insurance covers damage to data and systems caused by hackers and viruses and the cost of repairing the systems or retrieving the data.

Liability Insurance for Commercial Businesses

General Liability Insurance is sometimes also known as umbrella insurance. It is a standard type of insurance that covers the business in the event that legal claims arise from accidents, negligence, or other associated injuries. This coverage extends to legal defense costs as well as the payment of bonds or judgments against the business that result from the claims.

Professional Liability Insurance is applicable to businesses in the service industry. It is also often referred to as malpractice insurance and covers negligence or mistakes in service delivery to clients. It is legislated for medical professionals to have Professional Liability Insurance in most states.

Product Liability Insurance applies to businesses involved in manufacturing, wholesale, retail or distribution of products. A typical scenario will be a person getting food poisoning from food that was not properly sealed. Product Liability Insurance covers the risk of bodily harm occurring to customers as a result of a defective product. The liability can also extend to not having adequate instructions or warnings on a product.

Most states legislate that any business that has full-time employees has to have Workers’ Compensation Insurance. This insurance covers employees in the event of any work related accidents and will pay for the cost of any medical expenses as well as loss of wages during the period that the employee is unable to work.

Insurance Will Protect the Commercial Business and its Shareholders

In a commercial business, there are key players that run the business. This may be the CEO, Financial Director or Managing Director. Key Person Insurance is a life insurance policy where the business is the beneficiary. This allows the business to continue to operate in the event that there is a death of a key person. There are various other types of life insurance policies that can be taken out by directors and key shareholders to protect their business interests. Similar to life insurance is disability insurance which is coverage for the event that a director or key employee is permanently disabled and cannot function in a work capacity as they could before.

Business Interruption Insurance covers the loss of profit or cash flow as a result of interruptions in the work process. For example, a critical piece of machinery may break down and it may take several weeks before it can be repaired or replaced. During this time, the business cannot generate revenue. Although the machine can be replaced under property insurance, the loss of income cannot be recovered unless you have business interruption insurance.
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