What is company insurance?
Business insurance coverage protects businesses from loss due to events that may occur in the ordinary course of business. There are many types of business insurance, including coverage for property damage, legal liability, and employee-related risks.
Businesses assess their insurance needs based on potential risks, which can vary depending on the type of environment in which the business operates.
Key points
- Commercial insurance broadly refers to a class of insurance coverage intended for purchase by businesses rather than individuals.
- Businesses look for insurance to cover potential property damage, to protect themselves from lawsuits or contract disputes.
- Commercial insurance accounts for approximately half of the property casualty insurance industry in the United States and includes many insurance products known as “commercial lines.”
Understanding commercial insurance
It is especially important for small business owners to carefully consider and evaluate their business insurance needs because they may have greater personal financial exposure in the event of a loss. If a business owner does not feel that he has the ability to effectively assess business risk and the need for coverage, he should work with a reputable, experienced and licensed insurance broker. You can get a list of agents licensed in your state from your state Department of Insurance or the National Association of Insurance Commissioners.
Also known as commercial lines insurance, these coverages include business casualty and property insurance products. Trade Lines Insurance helps keep the economy running smoothly by protecting businesses from potential losses they could not cover on their own, allowing them to trade when it would otherwise be too risky to do so.
Commercial policies can be contrasted with personal lines insurance.
Types of commercial insurance
Several types of business insurance that small business owners might consider, including:
professional liability insurance
Professional liability insurance covers claims for negligence arising from errors or breaches. There is no one-size-fits-all professional liability coverage. Each industry has its own unique concerns that need to be addressed.
property insurance
Property insurance covers equipment, signage, inventory, and furnishings in the event of fire, storm, or theft. However, it does not cover mass destruction events such as floods and earthquakes. If your area is at risk for these problems, you will need a separate policy. Another exception is very high-value and expensive personal property, which is generally covered by purchasing a policy add-on called a “rider.” In the event of a claim, the property insurance policy will reimburse the policyholder for the actual value of the damage or the replacement cost to fix the problem.
business from home
Homeowners policies do not cover household assets like commercial property insurance covers business assets. If you have a home business, ask about additional coverage for equipment and inventory.
product liability insurance
If your business makes products to sell, product liability insurance is very important. Any company can find itself sued for damages caused by its products. Product liability insurance protects a company in such cases.
Vehicle insurance
All vehicles used for business must be fully insured. At a minimum, companies must insure against damage to third parties, but fully comprehensive auto insurance will also cover the vehicle in the event of an accident. If employees use their cars for work, their personal insurance will cover them in the event of an accident. One important exception is if a person delivers goods or services for a fee, including delivery personnel.
business interruption insurance
Business interruption (or continuation) policies are a type of insurance that is particularly applicable to businesses that need a physical location to do business, such as retail stores or manufacturing facilities. Business interruption insurance compensates a business for lost revenue during events that cause an interruption to the normal course of business.