What Is Commercial Insurance?

What Is Commercial Insurance?

Let me explain what commercial insurance is—it's often called business insurance, and it protects companies from the financial hits of unexpected events like lawsuits, natural disasters, or accidents. This insurance adjusts based on the risks your business faces, with options covering property damage, legal liability, and employee-related issues. If you get the right coverage, you can reduce potential losses and keep your operations stable even when things go wrong.

Key Takeaways

Commercial insurance protects your business from financial losses from events like lawsuits, natural disasters, or accidents. You'll find types such as general liability, property insurance, professional liability, and business interruption insurance. Assess your insurance needs based on risks that vary by your industry and location. Remember, commercial policies focus on businesses, not individuals, unlike personal insurance. I recommend consulting a reputable, licensed insurance broker to find the right coverage.

Understanding the Function of Commercial Insurance

As a small business owner, you need to evaluate your risks carefully because you might face personal financial exposure if a loss happens. Commercial insurance shields you from losses due to unforeseen events that you couldn't cover on your own, letting you run your business without taking on too much risk.

If you need business insurance, talk to a reputable, licensed broker. You can find licensed agents through your state’s department of insurance or the National Association of Insurance Commissioners.

Fast Fact

Commercial policies differ from personal lines insurance because they protect a business, not an individual.

Exploring Different Types of Commercial Insurance

Federal regulations mandate certain insurances like workers' compensation, and some states require additional coverage for specific businesses. In most cases, you should get coverages beyond what's legally required to protect yourself. I'll cover seven common types of business insurance here.

An Overview of Commercial General Liability Insurance

Commercial general liability insurance suits all businesses—it's comprehensive but doesn't cover every risk. It handles bodily injury, property damage, medical expenses, libel, slander, lawsuit defense, and settlements or judgments.

Understanding Professional Liability Insurance

Professional liability insurance, or PLI, is for service-providing businesses, unlike general liability which fits any business. It covers losses from the services you provide, protecting against costs from malpractice, negligence, or errors.

Insights Into Commercial Property Insurance

Property insurance is for businesses with substantial physical assets like equipment, signage, inventory, and furniture. It covers losses from events such as fire, storms, or theft, including damage to inventory, computers, furniture, or signage.

Warning

Commercial property insurance usually doesn't cover floods or earthquakes—if your area risks these, get a separate policy.

Insurance Considerations for Home-Based Businesses

If you run a home-based business, you'll likely need extra coverage for equipment and inventory. Standard homeowner’s policies don't cover home-based businesses like commercial property insurance does. You can add a rider to your homeowner's policy for minimal equipment and liability coverage.

Fast Fact

A business owner's policy bundles typical insurance options, making it ideal for small and home-based businesses—you buy it efficiently and save money.

The Essentials of Product Liability Insurance

Product liability insurance is for businesses dealing with products, like manufacturers, wholesalers, and retailers. It covers costs from damages caused by products, such as defective items leading to injury or harm. Without it, you risk paying for costly lawsuits.

Key Points About Business Vehicle Insurance

Insure any vehicles used for business, whether vans, buses, tractor trailers, or cars, for damage to vehicles, cargo, or injuries to others. States set minimum insurance requirements, and prices depend on factors like driving records and vehicle condition.

Navigating Business Interruption Insurance

Business interruption insurance applies to companies with physical locations, like stores or factories. It compensates for lost income from disruptions to normal operations, often added as a rider to property insurance or part of a business owner's policy. Some include civil authority provisions for government actions closing your business.

How Much Does Commercial Insurance Cost?

The cost of commercial insurance depends on your business details and coverage choices. Progressive says the median monthly cost for a business owner's policy is $70, while The Hartford reports $55 for its policies.

What Affects How Much Business Insurance Costs?

Factors influencing your policy price include employee count, business location, and coverage amount. More employees and coverage mean higher costs, and prices vary by region based on risks.

How Do You Get Commercial Insurance?

Get commercial insurance from an agency offering the policy you need. Work with an agent for quotes, options, and application guidance—you can often apply online or by phone.

The Bottom Line

Commercial insurance is crucial for protecting your business from losses due to lawsuits, accidents, natural disasters, and more. Evaluate your specific risks to select from types like general liability, professional liability, and property insurance. Consult a licensed broker or your state’s department of insurance for suitable coverage—this lets your business handle financial setbacks and operate with less risk.