Starting a new business is exciting, but you will need to understand the various commercial insurance types as a small business owner. As you know, insurance companies offer plans to protect people and their personal property. In that case, it makes sense to have insurance companies cater to businesses where they can avail of a wide array of services and additional coverage to protect the company against claims, losses, and litigation.
TacTik understands that purchasing commercial insurance is one the most crucial financial choices anyone could make for their business and could be the most valuable thing they have to do to support their livelihood. People invest thousands of dollars and time in creating their businesses. So protecting it from unfortunate circumstances is essential.
Here are some common types of small business insurance coverage your company might need.
- Commercial Liability
- Professional Insurance
- Commercial Property Insurance
- Business Interruption Coverage
- Commercial Auto Insurance
- Workers’ Compensation
- Business Umbrella
1. Commercial Liability
Commercial liability insurance protects small businesses against property and bodily injury lawsuits. Small business owners may be liable for property damage caused by customers. In addition, general liability insurance covers medical expenses and lost earnings for non-employee injuries caused by your organization. Commercial liability covers advertising damage, copyright infringement, and reputational loss.
If a client or another firm sues your small business, business liability insurance coverage will keep it afloat. In addition, general liability policies cover legal fees, settlements, and verdicts. Lenders, landlords, licensing boards, and customers typically demand general liability insurance before starting a business. There are various reasons to prioritize business general liability insurance.
2. Professional Insurance
Accountants, attorneys, and doctors who offer professional services are protected by professional liability insurance (PLI) against client-initiated allegations of negligence and other wrongdoing. Because general liability insurance plans do not protect against claims resulting from carelessness, malpractice, blunders, or deception, professionals with experience in a particular field need this kind of insurance.
Professional liability insurance policies may differ depending on the profession. Examples are medical malpractice insurance for those in the medical field or errors and omissions insurance for real estate agents. In addition, professional liability insurance is a specialty policy not included in homeowners’ endorsements, in-home business policies, or business owners’ policies.
Most professional liability insurance plans are claims-made, meaning that coverage is only valid for actions taken when the policy is in effect and for incidents that occurred during that time. You may also come across occurrence insurance, which ensures that you are protected even if a customer brings a claim against you after your policy has expired if the event happened while you were covered. Occurrence policies, however, are uncommon.
The insured is often protected by professional liability insurance against loss resulting from any claim or claims made during the policy term due to any covered mistake, oversight, or carelessness in the course of the insured’s professional activities during the policy period.
3. Commercial Property Insurance
Commercial property insurance covers your small business’s site, equipment, computers, and office furnishings. This coverage includes owned and rented company equipment. Commercial property insurance covers a lot to help a small company succeed. Tools, inventory, supplies, necessary paperwork, and company records are covered. In addition, commercial property insurance covers signage and fences.
Natural disasters like lightning, wind, hail, and fire may damage your small company property, but commercial property insurance covers everything. For example, commercial property insurance covers theft and vandalism.
There are several elements considered for commercial property Insurance.
Location: Buildings inside cities or towns with superior fire protection usually have lower insurance costs than those outside cities or places with lesser fire protection.
Building: Premiums for structures composed of potentially explosive materials will be higher, but discounts may be available for structures built of fire-resistant materials. It’s a good idea to speak with an agent or insurance company before renovating since additions to an existing structure might impact its fire rating. For example, any rate savings will be lost if a fire-resistant structure has wood walls, flooring, or stairways. On the other hand, a good fire rating may be maintained by having fire-resistant internal walls, floors, and doors.
Usage: A building’s use has an impact on its fire rating. More often than not, the business property will score higher than a restaurant or car repair business. One dangerous tenant has a detrimental impact on the building’s overall fire rating in a building with several tenants. A business’s premiums will be higher if it occupies a building with a riskier tenant.
Protection against theft and fire: Which fire hydrant and station are closest to you? Does the company have a sprinkler and fire alarm system? Why not install a security system? These are some considerations for commercial property insurance.
4. Business Interruption Coverage
If a fire or strike forces a small firm to close, a business interruption insurance coverage restores financial losses. In addition, business interruption insurance covers calamities, theft, and falling items. Finally, business interruption insurance covers damaged products, missed revenue, and temporary relocation costs if any of these issues affect your small business. This is also called business income insurance.
5. Commercial Auto Insurance
Company-owned automobiles, trucks, and vans require commercial auto insurance. Personal car insurance often excludes commercial usage. However, you need commercial auto insurance if your business uses a vehicle, truck, or van. Work vehicle claims may be dismissed without business car insurance. Accidents and damage would be your responsibility, which might be costly.
Hired and non-owned vehicle liability insurance covers workers who rent or use their automobiles for work. If you’re renting or driving a vehicle for work, you need to be hired non-owned auto liability insurance since your insurance won’t cover business driving. Doing so will offer you coverage and protect you from a large insurance claim if you have an accident while driving for business.
6. Workers' Compensation
Employers are required by law to take reasonable precautions to ensure worker safety. Nevertheless, mishaps do occur. Workers’ compensation insurance offers protection if this occurs.
Workers’ compensation insurance has two functions: it ensures that injured employees get medical attention and reimbursement for a part of the income they lose. At the same time, they cannot return to work, and it often shields businesses against lawsuits from employees hurt at work.
Whether or not the accident was the worker’s fault, they are entitled to payments. In addition, workers’ compensation, or “workers’ comp,” offers death payments for the worker’s dependents if they pass away while on the job.
Each state’s workers’ compensation system is governed by legislation. In addition, the program is governed by state laws and court rulings, and no two states have precisely the same rules and restrictions. The number of benefits to which an employee is entitled, the impairments and injuries that are covered, how impairments are to be assessed, and how medical treatment is to be provided are all factors determined by the state. States also choose whether workers’ compensation insurance is supplied by state-run organizations and commercial insurance firms or by the state alone. States also define how claims are to be processed, disputes are to be settled, and they may come up with cost-controlling techniques like restrictions on chiropractic therapy.
7. Business Umbrella Insurance
Business umbrella insurance, also known as commercial umbrella insurance, provides additional liability coverage for your small company. This business insurance policy covers liabilities over an underlying insurance policy’s maximum. Commercial umbrella policies may be used with general liability and commercial car policies.
For instance, if your firm gets sued for $1.2 million, your commercial liability coverage is just $500,000. The liability claim for a business umbrella insurance covers the $700,000 gap. An umbrella policy’s cost depends on your coverage and company risk.
Business owners often require commercial umbrella insurance to meet contracts requiring more significant coverage limits. In addition, extra liability protection is provided by commercial umbrella insurance for the most expensive legal actions. For instance, business umbrella coverage might provide extra money to cover the shortfall if a covered lawsuit exceeds the limits of your general liability insurance policy but leaves you still liable for damages.
Umbrella liability insurance may enhance the protection offered by:
- General liability protection
- Workers’ compensation insurance often includes employer liability insurance.
- Hired and non-owned vehicle insurance or commercial vehicle insurance (HNOA)
- Any (or any) of these plans may have their coverage increased by commercial umbrella insurance. But before you can get umbrella liability insurance, an insurer will demand that you have a certain level of protection for the underlying policy.
Frequently Asked Questions
What is the Best Risk Insurance that a Small Business Operator May Do?
The best risk insurance that a small business may do is liability insurance. It offers compensation to anyone who may be able to sue you for property damage, lost wages, medical expenses, and personal injuries sustained in a vehicular accident.
What Does a Commercial Insurance Policy Cover?
Commercial insurance, commonly known as business insurance, covers a company’s finances against risks, including customer lawsuits, employee or customer injuries, property theft and damage, and other unforeseen occurrences.
What is the Purpose of Commercial Insurance?
In the event of litigation, calamities, theft, accidents involving vehicles, and other unanticipated circumstances, commercial insurance protects businesses and their assets.
Provider of Commercial Insurance for Your Small Business
Choosing a reputable insurance company for your business and personal needs is crucial. That is why here at TacTik Insurance, each client is given individual assistance with the design of an insurance plan that not only covers their businesses but possessions, vehicles, and homes at the best possible cost. TacTik Insurance will be your best option.