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What is Commercial Insurance?

What is Commercial Insurance?
Catherine Hiles
Updated March 13, 2022
4 Min Read

Commercial insurance is a type of coverage designed to protect businesses against things like property damage, bodily injury, cyber attacks, or data breaches. There are several different types of commercial insurance, and each can be tailored to your business’s specific needs.

Let’s take a deeper look at the different types of commercial insurance that you can buy.

Types of commercial insurance

There are several different types of commercial insurance available for business owners. These types of policies cover anything from property damage and auto accidents to cyber attacks and worker illness or injury. Here’s some information on the main types of commercial insurance.

Commercial property insurance

Commercial property insurance is designed to protect the property in which you operate your business, whether you own it or rent it. In addition to the building itself, it also covers any equipment, tools, inventory, furniture, or personal property owned and utilized by your business.

You can take out a commercial property policy even if you operate your business out of your home. Some of the incidents that it covers include theft, damage to property such as your computers, and damage or destruction of important documents. It can also help pay for storage if your business’s location is damaged or destroyed and needs extensive repairs.

Commercial auto insurance

If your business has a commercial fleet and you or your employees frequently drive for work, it’s vitally important that you take out commercial auto insurance. This type of policy covers any incidents that happen when an employee is driving a vehicle owned by your business and for business purposes.

For example, if an employee gets into an accident while driving for work, commercial auto insurance can help cover any damages that occur, whether that damage is to another vehicle or to personal property. Similarly, if the employee hits a pedestrian while driving for work, commercial auto insurance can help take care of the medical bills that arise from any injuries.

Commercial general liability insurance

Commercial general liability insurance is a necessary type of coverage for all business owners. It can help cover costs incurred from bodily injury or property damage caused by your business or an employee of your business, medical costs resulting from a customer injuring themselves while on your property, and damage to a rented property.

General liability insurance can also help pay for defense costs if someone brings a lawsuit against your business. Additionally, if you or an employee cause damage while in a customer’s home while on business, general liability insurance can help cover repair or replacement costs.

Workers’ compensation insurance

Another type of commercial insurance that you should strongly consider is workers’ compensation insurance. This type of coverage helps protect your employees if they become sick or injured as a result of their job. It can also protect you as the business owner in the same way.

For example, an employee who slips and falls on the stairs at work may face unexpected medical costs that can place a burden on them. Workers’ compensation insurance can help pay for those medical costs for the employee. It can also protect an employee who develops carpal tunnel syndrome from a desk job that requires a lot of typing, or an employee who is injured in an auto accident while driving for work.

If the employee needs to take any time off for recovery, workers’ compensation insurance can help provide disability benefits so they don’t find themselves without a paycheck while they are recovering.

Business income insurance

If you are unable to run your business because of covered property damage, business income insurance can help replace the lost income to make sure your business will survive. 

When you make a claim on your business income insurance, you can ensure you’re able to still make payroll payments, mortgage payments, and any other payments to keep your business going while the property is repaired.

Cyber liability insurance

Cyber insurance helps protect your business from any technology-related risks such as cyber attacks, hacking, or data breaches. Depending on your provider, you may be able to choose between data breach coverage and cyber liability coverage, or you may be able to find a more general policy.

If your business is the victim of an attack in which your customers’ personal information is compromised, cyber insurance or data breach insurance can help cover any resulting lawsuits. It can also help pay for public relations costs if you need to spend a lot of time and money rebuilding your business’s reputation following a cyber attack. Finally, it can help pay for any technical assistance or repairs needed if your equipment is infected with a virus.

Business owner’s policy (BOP)

A business owner’s policy combines commercial property and commercial general liability insurance into one policy to make it easier to manage. If you have a BOP, you’ll have coverage for the property in which your business operates, as well as coverage if any injuries or other incidents happen on your property.

A BOP can be an easy way to get the two types of commercial insurance without having to take out separate policies, and may save you money.

Commercial insurance vs. business insurance

You may have heard the term business insurance in addition to commercial insurance and wondered what the difference was between the two. In fact, business insurance is the same as commercial insurance and the two terms are often used interchangeably. 

So rather than spending time wondering whether you need to take out commercial insurance or business insurance, spend that time looking into different insurance providers and getting quotes for policies that are customized to your business.

Summary

Commercial insurance is a necessity for business owners. It can help protect your property, employees, and equipment from harm and can help pay for business expenses if you’re unable to run your business due to property damage. Ask your insurance agent for the best quotes so you can find the perfect policy for your business.

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