You may not have heard of commercial insurance, but, believe it or not, it is the most commonly-purchased business insurance. To maintain your business’s financial integrity and viability, you must ensure that your finances are protected from potential losses. Commercial insurance protects the business owner and their employees from losses, typically through bodily injury, property damage, and business interruption. Commercial insurance varies from business to business, but in general, it all comes down to three main types:
In general, most businesses fall into one of three categories that affect the type of commercial insurance that you may need to consider. Let’s look at each category and what commercial insurance options are available for businesses in each group.
Types of Businesses
Many different types of businesses fall under “trade” or “commercial.” Examples include restaurants, hotels and motels, automotive repair shops and auto dealerships, health clubs, call centers, and franchises. These businesses are considered high-risk due to their exposure to business interruption or property damage. They also tend to have a high turnover rate for employees and a higher public profile due to their more significant number of customers per square foot and their more open hours.
However, these businesses have distinct characteristics that make them vulnerable to fire, vandalism, earthquakes, and computer viruses. For example, the fire risk is high for restaurants and hotels with open layouts that provide easy access to flammable material (cardboard and sawdust). Additionally, they may offer an opportunity to make off with a large amount of cash by hiring a vandal (perhaps with an accomplice) to torch their place of business.
Large Organizations
Many businesses fall under the umbrella term “large organization.” These are your typical large corporate companies or government entities that are always in need of additional financial resources or financial backing. These businesses often require insurance coverage due to their size, high public exposure, and low employee turnover rate. Their business is often one with a high degree of financial risk; for example, there is a lot of money tied up in their inventory, and theft is a risk.
Industries with High Risks
You’ll also find industries with high exposure to some specific type of risk. For instance, construction companies usually carry the most insurance because they are the highest-risk group for accidents and bodily injury claims. Hotels and restaurants are also in high-risk categories due to their exposure to property damage claims and business interruption claims.
Commercial insurance is primarily divided into three categories:
As you can see, most businesses fall into one of the three groups listed above, but the type of business and risk that your company faces depends on its industry and nature. One way to determine what kind of coverage your business needs is to look at its industry’s risks. For example, a local restaurant that serves breakfast will likely have more coverage than a call center with more human resources exposure.
Business interruption
For the most part, commercial insurance policies will not cover business interruption. This type of coverage is either purchased as a stand-alone policy or as part of one of your other types of commercial policies. It’s important to remember that insurance coverage can vary, so what you have listed here is a rule of thumb to use as a guideline. Your specific policy may or may not cover business interruption depending on the amount you are willing to pay for additional coverage and the type of liability you face from your customers and employees. Typically, this type of insurance will cover any loss due to business interruption caused by an event such as a fire, vandalism, or natural disaster.
Property coverage
In addition to business interruption, you will typically find coverage for property damage in your commercial insurance policy. This coverage will help cover any loss your clients may incur due to damage from natural disasters, such as hurricanes and earthquakes. This type of insurance will also cover any loss due to vandalism or damage caused by a crime.
Commercial insurance is typically used to protect a company’s assets by covering physical damage and business interruption losses. However, there are other types of commercial policies that may be used.
Businessowners policy (BOP)
This type of policy is what most people think of as commercial insurance. It’s a comprehensive policy covering your assets and your liability for losses suffered by others. However, to ensure that you are fully covered, it’s essential to review your business insurance coverage. The best way to do this is by reviewing the actual policy itself. Tip: always ask your agent or broker to accompany you when you review the actual policies so that they can point out any exclusions or exceptions in the terms and conditions. It’s also a good idea to have a lawyer review the policies to ensure that all aspects of your business are protected.
Workers Compensation Insurance
You’ll commonly find workers’ compensation insurance coverage, also called “employer’s liability.” This type of policy provides coverage for bodily injury done to employees during their employment. Workers’ compensation insurance will typically cover all losses incurred most often in the workplace, such as illness and injuries sustained during work hours or while on a company-owned vehicle. However, you will want to know whether or not your business has a designated risk status. According to the Oregon Bureau of Labor and Industries, if your business is a large corporation or provides services to others (such as managing a hotel), it should have workers’ compensation coverage. Otherwise, your business may be deemed a low-risk employer, and you will not be required to carry such insurance.
Liability insurance
This type of insurance is designed to protect your business from claims arising from your work. For example, suppose you are doing a project for a customer. In that case, it’s essential to have some liability policy in place if that client makes claims against your company for damages suffered due to a product failure or negligence on the part of your employees. Liability insurance should also cover bodily injury claims against your business due to an employee’s actions or negligence. Essentially, this kind of coverage protects against moral and contractual liability and property damage liability.
Coverage of Contents Insurance
Covering your business’s inventory or furniture is essential in today’s complex economy. While you may believe that you are adequately covered by one or more of your other policies, an insurance policy covering inventory will ensure that your insured assets are not lost even if a fire destroys your business. This type of coverage is typically used to protect the assets that an employer provides to a customer and any personal property belonging to employees other than the employee’s personal property. The actual amount covered is dependent on many factors, including the value, type, and location of items insured.
In conclusion, any business owner needs to understand the types of coverage available, what their policy will and will not cover, and how to ensure they are fully protected in a loss. While commercial insurance may seem complicated when you know what kind of coverage your business needs, it won’t be that bad.
You may not have heard of commercial insurance, but, believe it or not, it is the most commonly-purchased business insurance. To maintain your business’s financial integrity and viability, you must ensure that your finances are protected from potential losses. Commercial insurance protects the business owner and their employees from losses, typically through bodily injury, property damage, and business interruption. Commercial insurance varies from business to business, but in general, it all comes down to three main types:
In general, most businesses fall into one of three categories that affect the type of commercial insurance that you may need to consider. Let’s look at each category and what commercial insurance options are available for businesses in each group.
Types of Businesses
Many different types of businesses fall under “trade” or “commercial.” Examples include restaurants, hotels and motels, automotive repair shops and auto dealerships, health clubs, call centers, and franchises. These businesses are considered high-risk due to their exposure to business interruption or property damage. They also tend to have a high turnover rate for employees and a higher public profile due to their more significant number of customers per square foot and their more open hours.
However, these businesses have distinct characteristics that make them vulnerable to fire, vandalism, earthquakes, and computer viruses. For example, the fire risk is high for restaurants and hotels with open layouts that provide easy access to flammable material (cardboard and sawdust). Additionally, they may offer an opportunity to make off with a large amount of cash by hiring a vandal (perhaps with an accomplice) to torch their place of business.
Large Organizations
Many businesses fall under the umbrella term “large organization.” These are your typical large corporate companies or government entities that are always in need of additional financial resources or financial backing. These businesses often require insurance coverage due to their size, high public exposure, and low employee turnover rate. Their business is often one with a high degree of financial risk; for example, there is a lot of money tied up in their inventory, and theft is a risk.
Industries with High Risks
You’ll also find industries with high exposure to some specific type of risk. For instance, construction companies usually carry the most insurance because they are the highest-risk group for accidents and bodily injury claims. Hotels and restaurants are also in high-risk categories due to their exposure to property damage claims and business interruption claims.
Commercial insurance is primarily divided into three categories:
As you can see, most businesses fall into one of the three groups listed above, but the type of business and risk that your company faces depends on its industry and nature. One way to determine what kind of coverage your business needs is to look at its industry’s risks. For example, a local restaurant that serves breakfast will likely have more coverage than a call center with more human resources exposure.
Business interruption
For the most part, commercial insurance policies will not cover business interruption. This type of coverage is either purchased as a stand-alone policy or as part of one of your other types of commercial policies. It’s important to remember that insurance coverage can vary, so what you have listed here is a rule of thumb to use as a guideline. Your specific policy may or may not cover business interruption depending on the amount you are willing to pay for additional coverage and the type of liability you face from your customers and employees. Typically, this type of insurance will cover any loss due to business interruption caused by an event such as a fire, vandalism, or natural disaster.
Property coverage
In addition to business interruption, you will typically find coverage for property damage in your commercial insurance policy. This coverage will help cover any loss your clients may incur due to damage from natural disasters, such as hurricanes and earthquakes. This type of insurance will also cover any loss due to vandalism or damage caused by a crime.
Commercial insurance is typically used to protect a company’s assets by covering physical damage and business interruption losses. However, there are other types of commercial policies that may be used.
Businessowners policy (BOP)
This type of policy is what most people think of as commercial insurance. It’s a comprehensive policy covering your assets and your liability for losses suffered by others. However, to ensure that you are fully covered, it’s essential to review your business insurance coverage. The best way to do this is by reviewing the actual policy itself. Tip: always ask your agent or broker to accompany you when you review the actual policies so that they can point out any exclusions or exceptions in the terms and conditions. It’s also a good idea to have a lawyer review the policies to ensure that all aspects of your business are protected.
Workers Compensation Insurance
You’ll commonly find workers’ compensation insurance coverage, also called “employer’s liability.” This type of policy provides coverage for bodily injury done to employees during their employment. Workers’ compensation insurance will typically cover all losses incurred most often in the workplace, such as illness and injuries sustained during work hours or while on a company-owned vehicle. However, you will want to know whether or not your business has a designated risk status. According to the Oregon Bureau of Labor and Industries, if your business is a large corporation or provides services to others (such as managing a hotel), it should have workers’ compensation coverage. Otherwise, your business may be deemed a low-risk employer, and you will not be required to carry such insurance.
Liability insurance
This type of insurance is designed to protect your business from claims arising from your work. For example, suppose you are doing a project for a customer. In that case, it’s essential to have some liability policy in place if that client makes claims against your company for damages suffered due to a product failure or negligence on the part of your employees. Liability insurance should also cover bodily injury claims against your business due to an employee’s actions or negligence. Essentially, this kind of coverage protects against moral and contractual liability and property damage liability.
Coverage of Contents Insurance
Covering your business’s inventory or furniture is essential in today’s complex economy. While you may believe that you are adequately covered by one or more of your other policies, an insurance policy covering inventory will ensure that your insured assets are not lost even if a fire destroys your business. This type of coverage is typically used to protect the assets that an employer provides to a customer and any personal property belonging to employees other than the employee’s personal property. The actual amount covered is dependent on many factors, including the value, type, and location of items insured.
In conclusion, any business owner needs to understand the types of coverage available, what their policy will and will not cover, and how to ensure they are fully protected in a loss. While commercial insurance may seem complicated when you know what kind of coverage your business needs, it won’t be that bad.
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