Commercial insurance was created to protect the owners and employees of a company against losses and claims. Of course, every business has its own unique structure, and that’s why commercial policies are so varied.
Every business owner should obtain a commercial insurance quote before starting operations. Some of the more common types of commercial insurance policies cover losses associated with the breakdown of equipment, business liability issues, and company vehicles.
Owners can opt to add specialized coverage for workers compensation and more. A commercial policy is the ideal way to protect all of a company’s assets and property.
Commercial insurance comes in a wide variety of policy types in order to match the specific needs of companies. When commercial insurance brokers write policies, the coverage typically includes general areas of protection like commercial property, business income, general liability claims, coverage for business owners, vehicle policies, as well as policies to protect officers and directors of the organization.
For on-the-job injuries and damage to property, general commercial liability insurance policies meet business owners’ needs. If a company has to shut down due to fires, natural disasters or other unanticipated occurrences, a business income policy can cover those losses. A commercial property policy is the appropriate choice for insuring business assets and equipment like inventory, computers, specialized tools, and high-tech machinery.
Other major categories of policies include those that cover commercial vehicles, workers compensation, and items not included in typical general liability policies, like the personal assets of corporate officers and directors.
In most cases, commercial property insurance protects against losses like theft, fire damage, and natural disasters. Businesses of all kinds usually have at least some form of commercial property insurance coverage. If they don’t, the company’s livelihood is at risk. This kind of protection is vital for companies who own valuable assets like large amounts of inventory, high-end technical equipment, and specialized machinery. A key characteristic of commercial property policies is their ability to protect against losses to a company’s buildings and other significant assets.
For companies with vast holdings, the annual cost for commercial property insurance can be a core expense, just like the cost of life, health, auto, and homeowners insurance is for an individual. But for corporations, the cost of insurance is usually deductible as an expense, which means a lower tax obligation.
The essential part of any company’s commercial coverage policy is the value of any buildings and assets. In order to determine the type and amount of insurance needed, agents spend time with company owners to determine the exact value of every asset to be covered.
Companies who have commercial policies will notice that costs are affected by a number of factors like the location of the main building, how many people occupy the building on a typical work day, the construction material used in the structure, the proximity of fire hydrants, whether there is a sprinkler system, the presence of a standard security/alarm system, and more.
Commonly called BOPs, business owners’ policies provide loss protection for many common types of liability and property risks under the umbrella of a single policy. Typically sold at a reduced price, these policies offer bundled coverage at a much lower rate than if each category were insured individually. Highly popular with owners of small and medium-sized organizations, business owners policy coverage is among the most affordable ways to obtain comprehensive protection against a wide variety of losses.
A standard business owners policy includes three kinds of insurance, offering business interruption protection, property insurance and commercial liability insurance. Whenever a disastrous event forces a company to cease operation, business interruption insurance protects against monetary losses. When it comes to property protection, a typical BOP insures the company for losses arising from storm damage, fire or vandalism, to name a few common categories. And for any legal claims that result from damages caused by the company or its employees, the liability component of a BOP provides coverage.
Policies that protect against Maryland commercial auto insurance risks are a necessity for any business that uses cars or trucks to conduct its day-to-day operations. Individual auto insurance does not offer the many advantages that come with commercial auto insurance. The most common advantage is a commercial policy’s ability to set very high limits on coverage.
Corporations and small business entities have special needs when it comes to vehicle coverage. High coverage limits, for example, are in place to help companies cover potential damage awards in lawsuits, large medical expenses, and considerable legal fees for attorney work. A commercial auto policy can also protect owners against claims made by employees who drive company vehicles.
Employees who do on-the-job driving in company cars and trucks expose owners to a high level of liability, even in cases when an accident is not the fault of the employee-driver. When companies decide to rent or lease a fleet of vehicles, there’s usually a legal requirement that the business obtains, or already has, sufficient commercial auto insurance. Otherwise, most leasing agencies won’t provide vehicles to the business owner
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For a broad range of protection for businesses of all kinds, commercial general liability (CGL) can cover many types of property damage that commonly arise from the day-to-day operation of a company. It also protects against claims resulting from personal or physical injury on the job. When consumers use a product made by the company and become injured or sick, or when someone suffers an accident on company premises, a CGL policy can offer protection against loss.
Routinely, but mistakenly called comprehensive policies, a standard CGL does cover multiple kinds of risks but not a comprehensive list of losses. As is the case with many other categories of insurance coverage, CGLs can cover lower or higher levels of risk.
Many policies of this kind are said to offer "premises coverage" because they insure against claims arising from injuries or events that take place on company property during regular hours. It's also possible to include coverage within a CGL that covers owners for injuries to consumers of the company's products. Most insurers offer the option to add special coverage into a typical CGL policy if need be.
In most cases, commercial general liability (CGL) policies cover claims for property damage, "advertising injury," and personal injury. One of the most common kinds of lawsuits against business owners is the so-called "slip and fall" case. A non-physical kind of injury, known as reputation harm, takes place when something a business owner says or does causes measurable damage to the commercial image of another company.
There are multiple areas of coverage in a standard CGL policy, including protection against property damage, legal fees, adverse court judgments, court costs you are forced to pay during or after a trial, and more. It's important to note the areas of coverage that are not typically included in a CGL policy, namely any claim arising from an illegal act on the business owner's part, or any act that can be considered intentionally harmful or malicious.
Two other areas that aren't covered under the standard CGL policy are vehicle-related expenses sustained by the owner or the owner's employees while driving a company car or truck and which were the fault of the owner or employee-driver. Nor will a CGL cover on-the-job claims for injuries made by company employees.
For most companies, state laws require that they carry business insurance of one kind or another. Always check with local ordinances to make sure you're in compliance with local regulations. Just as individual motorists must have basic coverage to own and operate a personal vehicle, nearly every business in the U.S. needs business insurance.
If you hire employees, for example, a workers comp. policy is a necessity. It will protect owners against losses arising from on-the-job worker injuries and accidents. One advantage of workers comp. insurance, for owners, is that it prevents employees from suing an owner directly in the event of an injury. Additionally, a company with paid workers is required to have unemployment insurance.
And if one or more vehicles are used by those workers, then the law will mandate commercial vehicle insurance. It's important to remember that personal auto policies do not cover company vehicles. Each state's laws are slightly different, but any company that has paid workers and a fleet of vehicles will need workers comp., unemployment and commercial vehicle insurance policies just to conduct day-to-day functions.
Besides those three basic kinds of business insurance there are many more, some of which are and some of which are not mandated by state and federal laws. State laws differ on what types of polices are needed and what the specific limits of liability are for each type of insurance that is required.
Business owners should understand what types of insurance policies are right for their companies. Every organization has its own unique characteristics, operating environment, and local regulations to take into account when choosing insurance coverage. It's important to keep in mind that besides the several kinds of insurance that the law requires, there are many forms of business insurance that are optional. Workers comp, commercial vehicle and unemployment are typically required by law, as are disability policies, in most states.
When it comes to the kinds of insurance that are not required by law, various forms of product liability, coverage, professional liability, commercial property, general liability and a host of others are completely up to the discretion of the company's owners. In fact, fewer than half of all U.S.-based businesses carry business insurance that exceeds state and federal requirements.
Companies that carry only the legally-required coverage expose their business to very high levels of risk. It's a common misconception among business owners that cutting back on insurance costs and coverage, when legally possible, is a smart way to reduce company expenses.
There are several ways to figure out if your company needs to carry commercial vehicle insurance. Generally speaking, if cars or trucks are used in the routine operation of company business, then a vehicle policy should be in effect. Specifically, owners need to know whether there are local regulations that call for such insurance. And if employees are the ones who typically use those vehicles to conduct company affairs, then a commercial vehicle policy should be in place.
Other key points to consider are how vehicles are used, what kinds of cars and trucks the company owns, and how much those vehicles weigh. There are some instances where a personal auto policy might work; the owner of a sole proprietorship who uses a car for business and personal needs can usually get by with a standard auto policy. In most other situations where vehicles are used for company business, commercial policies are needed.
For example, 18-wheelers and dump trucks are categorized as commercial vehicles by individual states and must be covered by commercial vehicle insurance policies. In general, if a car or truck is company-owned, is used for business purposes, and exceeds state-set weight limits, it must have higher coverage amounts than personal auto policies offer — and commercial coverage is needed. Small businesses in which owners use their personal cars to travel to and from the office can usually get by with personal auto insurance. Companies, however, that employ workers who drive while on the job need the coverage commercial vehicle insurance offers.