Business owners face many risks in the course of doing business. Proper planning and daily monitoring can help business owners manage environmental risks such as changing economic conditions and fluctuating markets. Situational risks require a different approach. Protection against risks such as fire, theft or injury requires an investment in commercial insurance.
Identification
Commercial insurance is insurance protection designed for medium to large businesses such as limited liability companies and corporations. Common industries requiring commercial insurance include restaurants, manufacturing and commercial real estate businesses. Commercial policies are more complex and cover risks not addressed in business insurance designed for smaller companies such as sole proprietors and partnerships. Premiums are higher for commercial insurance policies because of added risk factors and potentially higher payouts.
Types
The three categories of commercial insurance are property, liability and worker's compensation insurance. Numerous types within each category can customize commercial insurance to specific business needs.
Property insurance covers real estate and personal property. Available types that apply to most businesses include equipment breakdown, debris removal, business interruption, ordinance and crime insurance. Types that apply to specific business types include builder's risk, glass, renter's, inland marine and fidelity bond insurance.
Liability insurance covers injuries or property damage done to a third party, such as a customer. General liability commercial policies provide protection for risks such as when a customer receives an injury resulting from a fall on your property. Specialized liability policies can include errors and omissions, malpractice, vehicle and directors' and officers' liability insurance.
Worker's compensation insurance covers employees for injuries they receive on the job. State laws regulate the amount and type of worker's compensation insurance you must carry.
Features
A commercial insurance policy contract features four sections that describe terms and conditions. The first section includes information on the event or item the insurance covers. The second section features premium cost and payment information. The third section outlines conditions and exclusions, and the final section describes claim payment procedures.
Purchasing Options
Commercial insurance, with its many products and options, can be confusing to purchase. An option to help you is a commercial insurance broker. These brokers work with you to define insurance needs, balance those needs against your budget and shop for policies that meet your requirements. Additionally, a commercial insurance broker can help file claims and perform periodic reviews to make sure your commercial insurance policies continue to meet your needs.
Considerations
Take the time to read and understand policy provisions before committing to a commercial insurance policy. Important considerations include the premiums, deductible amounts and policy exclusions. Insurance premiums depend in part on the risk your business poses to the insurance company. Taking steps to reduce your risk level can result in lower premiums. Deductible amounts significantly affect the cost of insurance. Determine the right deductible for you by weighing the cost savings seen in a higher deductible with the increased amount you will pay if you file a claim. Also, make sure you understand what the policy does, and does not, cover. Policy exclusions are a way for insurance companies to save money and encourage you to purchase additional, specialized insurance. Exclusions can include items, situations and events.
Member Comments