Mar 10
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The Four Basic Types of Commercial Insurance
Commercial Insurance is one of the most important investments a business can make. It is all about protecting your assets, your people and your customers from a multitude of possible risks. A comprehensive business insurance program can be complex but the basic forms of insurance are not that different from the types of personal insurance you are familiar with already: property, liability, and auto.
The first objective of any commercial insurance program is to protect your business assets and get you back in business quickly in the event of a disaster. It can protect you from large expenses, but there still may be some gaps that you should be aware of an discuss with your broker.
Business Property
Business property insurance is not unlike your homeowners policy in that it will cover buildings and other structures on a property as well as the contents of the property from such losses as fire, theft with and other possible accidents. Flood is almost never covered, just like in you homeowners policy, and business automobiles need to be insured on a separate policy, just like your car insurance.
When requesting commercial property insurance quotes, make a checklist of your business property, including buildings, contents, stock, and equipment. Commercial property insurance is typically paired with Business Interruption coverage which is designed to help you recoup lost income in the event that a property loss causes your business to shut down. Review your income statements for the prior 12 months and consider how much income you might lose if your operations are shut down for a long period of time.
Business Liability
Business liability insurance is designed to protect your business in the event that your business is sued for negligence allegedly causing bodily injury or personal injury to another person or entity. This can range from slip and fall type accidents at your business premises to advertising injury. Defense costs are provided by the insurance company as well.
Product liability insurance protects against financial loss as result of a defective product that causes injury or bodily harm to a person or entity. Since product liability insurance is complicated, you will often see this coverage excluded from a standard commercial liability insurance policy. The insurance company may prefer to have that coverage on a separate policy which can be underwritten by product specialists. It would depend on the nature of your business.
Business Auto
Commercial Auto Insurance is necessary if the vehicle you are using is being driven by employees or if the vehicle has been altered for commercial purposes. Commercial auto policy rates are set based on the type of vehicle (private passenger vehicles or trucks) and its use (deliveries, contractors, sales calls etc).
Workers Compensation
Workers Compensation rates are dependent on type of work performed and the amount of payroll you have. Workers’ compensation insurance is mandated by each individual state for employers. Another significant factor in your rates is the past history of on the job injuries for your business. It is important to make every effort to minimize injuries and implement a injury prevention program for your workplace.
Often commercial insurance quotes are estimates of the total amount of insurance. Factors can affect and change the total amount of insurance premiums that you pay, such as payroll changes, fluctuations of property values for inventory, or changes in sales. That is why you need to know the rates that are being charged for the insurance, not just the total. That way will be prepared for a change in insurance premiums if you make sudden changed to your business mid-year.
Commercial insurance agents will advise you as to which coverages are available and recommended for your type of business. No two businesses are ever alike. For sure, if you ignore the important business of insurance you are placing your company on dangerous ground.
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- Commercial Property Insurance: Commercial Insurance for Your Business