The standard types of commercial insurance include property, liability, and workers’ compensation. However, other types of small business insurance options are available.
A business insurance policy is required by U.S. law if you have staff because it protects your business in times of trouble. There are stipulated coverages but based on your particular circumstances, you may need additional specialized coverages.
Different Types of Commercial Insurance
The seven types of commercial business insurance are identified below:
- General Liability Insurance – All small businesses require a liability insurance policy. Liability insurance covers you if a product you provided, or service rendered to a client caused them bodily harm or damaged their property.
- Professional Liability Insurance – This is sometimes referred to as Errors & Omissions and malpractice insurance. This applies to coverage if a client sues your business for negligence in services rendered that caused them bodily harm or property damage.
- Property Insurance – This policy covers for loss through theft and damage caused by vandalism, fire, smoke, and natural disasters to the warehouse or structure in your business environment, including the equipment and inventory.
- Commercial Auto Insurance – If your small business owns and operates a fleet of vehicles (at least 10), use a vehicle to operate business services, or deliver a product, you will need commercial auto insurance. This policy offers bodily injury and property damage liability if you or an employee should there be an accident during business hours when operating a company-owned vehicle.
- Business Owner’s Policy (BOP) – This insurance policy includes both property and liability protection as well as legal protection if you should be sued for unfair business practices by an employee or client.
- Workers’ Compensation – This coverage type offers insurance coverage to your employees if they are injured while performing a work-related task . To avail these benefits, an employee must sign an agreement, surrending their right to sue their employer for an injury sustained in a work-related assignment.
- Data Breach – If your small business stores confidential information about staff and clients electronically, a data breach policy will cover the loss.
Learn Business Insurance 101 with These FAQs
- What is business insurance?
- Business insurance includes a broad range of policy options that have been designed to protect businesses from financial loss due to a unique set of risks. Depending on factors including the size of your company, the total strength of your workforce, the materials they handle, and the number of business vehicles that you own, your policy will have different amounts and types of coverage.
- How does business insurance work?
- It is a contract between the insurance company and a business. The insurer agrees to provide financial protection in the event of a specified loss in exchange for premium payments. When a catastrophe happens, the business will file a claim for the damage. An adjuster will assess the damage and process the claim. The business will then receive the appropriate amount of compensation for the loss, less any deductible.
- How much does business insurance cost?
- A typical small business insurance policy costs about $200 per month or less.
- Is business insurance tax-deductible?
- Business insurance is tax-deductible if the coverage is to operate a business, profession, or trade.
- Does business insurance cover embezzlement?
- If your business carries commercial crime/theft coverage, your business insurance will protect you against employee fraud and embezzlement.
- Does business insurance cover lawsuits?
- Business insurance will cover potential lawsuits, provided you have the appropriate business liability insurance for your unique situation and adequate liability coverage to pay your legal costs.
What Is Small Business Insurance?
Small business insurance is an insurance package with coverages recommended for the protection of small businesses in the event of perils within specified limits and protection coverage.
Important Types of Small Business Insurance
Important types of small business insurance include general liability insurance, professional liability insurance, commercial auto insurance, business owner’s policy, data breach, and workers’ compensation. These are expected to provide the first layer of protection in times of trouble.
Other Insurance Coverage that You May Need to Consider
- Boiler and Machinery Insurance – Also called equipment breakdown or mechanical breakdown coverage, it provides coverage for the accidental breakdown of machinery and equipment.
- Debris Removal Insurance – Covers the cost of removing debris after a fire, flood, windstorm, etc.
- Glass Insurance – Covers broken store windows and plate glass windows.
- Inland Marine Insurance – Covers property in transit and other people’s property on your premises.
- Business Interruption Insurance – Covers lost income and expenses resulting from property damage or loss, including salaries, taxes, rents, and net profits that would have been earned.
- Tenant’s Insurance – Covers damages to improvements you make to your rental space and damages to the building caused by the negligence of your employees.
- Crime Insurance – Covers property crimes such as theft, burglary, and robbery of money, securities, stock, and fixtures from employees and outsiders.
- Fidelity Bonds – Covers losses due to a bonded employee’s theft of business property and money.
- Directors’ and Officers’ Liability Insurance – Generally purchased by corporations and nonprofit organizations to cover the costs of lawsuits against directors and officers.
Depending on your specific business needs, you may need to speak with an agent to choose the right coverage. The experts at Udell Family Insurance are here to make sure that you have the right insurance in place. We are ready to assist you with all your coverage needs today.