Business Insurance
What is Commercial Insurance?
“Business Insurance” is a general term that applies to a number of different policies that a given business may need.
In general, a business insurance policy is a contract between an insurance company and a business owner. In exchange for a monthly payment, called a “premium,” the insurance company agrees to protect the company against financial loss or legal proceedings incurred as a result of the ordinary business operations of the business.
Since there are different types of businesses, the coverage required by two different companies can differ significantly.What Is Business Insurance? The Ultimate Guide
Why does a Business need Insurance?
In addition to protecting against financial loss or legal claims, businesses may be required to carry certain types of insurance to meet requirements for:
- leases
- commercial contracts
- Statutes
Common Types of Business Insurance
While any insurance policy purchased by a business owner is considered “business insurance,” certain types of policies are more common:
General Liability Insurance
It protects the business if an individual, called a “third party”, is harmed as a result of business operations. This covers:
- Third-party injuries, for example, if a customer trips and falls on business property
- Damage to the property of third parties
- Lawsuits for injury or property damage
General Liability Insurance
It protects the business if an individual, called a “third party”, is harmed as a result of business operations. This covers:
- Third-party injuries, for example, if a customer trips and falls on business property
- Damage to the property of third parties
- Lawsuits for injury or property damage
product liability
Covers the business if legal action is taken against it, specifically for a product it makes, sells, or distributes:
- hurt someone
- make someone sick
- Damage someone’s property
It is sometimes included in the general liability policy but can also be purchased separately.
professional responsibility
Covers professionals from claims brought against them for damages caused by mistakes or failure to provide adequate services to clients.
Also called “errors and omissions” insurance.
For professionals like:
- doctors
- lawyers
- Investment Advisors
- accountants
- Real Estate Agents
- insurance agents
Damage to property
Covers damage to offices, factories, or other physical spaces of the company. Includes coverage for inventories, equipment, signage, supplies, and raw materials.
Causes of loss generally covered include:
- Fires
- Stole
- vandalism
- storms
While damage caused by storms or water leaks may be covered, damage from natural disasters, such as floods, hurricanes, and earthquakes, is often not covered. For companies in states where these are common, they usually have a separate policy to cover these risks.
workers compensation
Covers the business against lawsuits brought by employees who are injured on the job or the families of employees who are killed on the job. To collect benefits under a workers’ compensation policy, the injured party agrees not to sue the company.
If an employee is injured on the job, these policies cover:
- partial lost wages
- medical costs
- Recovery costs, such as physical therapy
If an employee is killed on the job, these policies cover:
- funeral costs
- Financial assistance to the family of the deceased to make up for lost wages
Most states require all employers to have a workers’ compensation policy.
