If you could predict the future, the insurance industry would be dead. Everybody hopes their business runs smoothly and without getting into legal trouble. But when issues arise, the appropriate commercial insurance can relieve any stress.
There are so many types that it’s understandable you might be wondering just what is commercial insurance? Insurance for commercial entities can get complicated very quickly, with different types required for different business sectors and models.
But there’s no need to let the bureaucracy overwhelm you or leave you uninsured when it matters most. We’ve put together this article to explain what commercial insurance is and why it’s important.
Read on to get out of the bureaucratic labyrinth and understand your next move.
What Is Commercial Insurance Exactly?
It’s an umbrella term for a group of insurance products aimed at commercial enterprises. These include companies, self-employed people, and any other business.
Because businesses have different needs than individuals, the insurance they require is separate from personal insurance. The law sometimes requires businesses to have certain types of commercial insurance. These are usually types that protect employees and clients.
There are other types of commercial insurance aimed at protecting your business. This might be things like property and auto insurance or professional liability. Understanding which types of commercial insurance are recommended for your business can prevent your business from financial trouble.
The Legal Requirements for Commercial Insurance
There are some types of commercial insurance that you must have by law in certain situations. As laws can vary between states, you must check the legal requirements in your state.
Workers’ Compensation Insurance
Workers’ compensation insurance is a vital line of coverage to carry.
It is mandatory across most states. In Florida, if you have W-2’s in the construction industry or more than 4 employees (full or part-time) in a non-construction business, you must carry workers’ compensation coverage.
It is important to understand the laws of the states where your employees reside. Workers’ compensation insurance is in place for employees who sustain an injury while working and the policy provides medical support and compensation for lost wages.
Commercial Auto Insurance
If your business has its own vehicles, it must have commercial auto insurance rather than personal auto insurance. This insurance protects your vehicles in the case of accidents, break-ins, and other issues.
This is a legal requirement in the majority of states and absolutely recommended in the states where it isn’t set in law.
Professional Liability Insurance
Compulsory commercial insurance requirements are mostly dealt with on a state-by-state basis. This makes it crucial to seek expert advice to learn which insurance you need by law.
Professional liability insurance isn’t always compulsory but it is required in seven states for physicians and one state for law firms. It is a requirement in some states for other industries as well.
Regardless of whether it’s required or not for your business, it is highly recommended. Professional liability insurance (otherwise known as professional indemnity or malpractice insurance) protects you in case customers or clients sue you for negligence or loss caused by the services you have provided.
You may also be required to have this type of insurance by any regulatory bodies your business is part of or by clients themselves.
Other Types of Commercial Insurance
There are other types of commercial insurance that you need to consider when you have a business.
Commercial Property Insurance
It’s vital to insure your business property against situations like fire, flood or break-ins. This type of insurance protects your inventory and office content no matter what happens.
For self-employed business owners who work from home, you’ll need to ensure that your home is suitably insured with the policy covering business use as well as personal.
Damage to business property can have a severe impact on your business’s ability to function and can be exceptionally expensive to rectify. With the appropriate property insurance in place, you know you’ll be covered.
General Liability Insurance
General liability covers a wide range of situations. This includes a third party injuring themselves while on your business property. It also includes slander and copyright infringement lawsuits plus many other potentially hazardous issues.
Always check general liability policies thoroughly so you don’t buy other insurance that they already cover.
Employment Practice Insurance
When you run a business with employees, you are at risk of lawsuits for reasons stemming from your staff. Employment practice insurance covers businesses against claims for unfair dismissal, discrimination, and harassment among others.
Many small businesses might think they don’t have enough employees to justify having employment practice insurance. However, they are often the most at risk of any claims having a serious impact on their future.
Even prospective staff who have undertaken an interview at a business may decide to bring a claim if they weren’t hired. This risk makes it sensible to have employment practice insurance no matter what size business you run.
Excess Liability Insurance
By their very nature, lawsuits and claims against a business are difficult to predict and can exceed normal policies. To mitigate that risk, excess liability insurance is useful so that a business is covered in this eventuality.
Excess insurance provides insurance for lawsuit costs that go above policies. This provides businesses with the reassurance that claims won’t bankrupt them no matter how large.
How to Understand Your Commercial Insurance Needs
With so many types available, whether you have a business or are working with businesses who require cover, it’s essential to analyze the needs properly.
The answer to ‘what is commercial insurance?’ isn’t as black and white as business owners would like. But the right insurance is crucial to the longevity of every business.
Now you can see a variety of commercial insurance types, get in touch with us to discuss your needs. We’re experts in commercial insurance and show you exactly what insurance you’ll need and the policies that are suited to your requirements.