Choosing Commercial Business Insurance
The reality is that in today’s world, every business needs commercial insurance to help protect them against potentially disastrous circumstances. But what types do you need, exactly?
Related: Why Commercial Insurance is a Must
Although this is a simple question, the answer is nuanced. I’ll outline the most common forms of commercial insurance, and then provide insider tips on how you can choose the best option.
Are There Different Types of Business Insurance?
Overall, there are 13 core business insurance types available. Here’s a brief overview of each:
General Liability Insurance
General liability (GL) insurance covers lawyer’s fees, court costs, settlements, and judgments related to bodily injury, property damage, libel, and slander claims filed by customers and other non-employees. A typical example of when this insurance might apply is a slip and fall accident on your business’s premises.
Commercial Property Insurance
Commercial property insurance covers your business’s physical assets (e.g., tools, equipment, computers, inventory, furniture, etc.), including the building you occupy, against perils like fire, smoke damage, theft, wind and hail storms, civil disobedience, and vandalism.
Business Owner Policy (BOP)
A business owner policy (BOP) bundles commonly-required business insurance into a single policy, including property, liability, commercial vehicle, business interruption, and crime coverage. This can help make the shopping process more manageable and generally less expensive than purchasing each coverage separately.
Professional Liability Insurance
Professional liability (also known as errors and omissions) insurance covers lawyer’s fees, court costs, settlements, and judgments for customer and client claims related to your business’s failed or improperly rendered professional services, which isn’t something offered by your company’s GL policy.
Examples of professional liability claims include malpractice, errors, and negligence.
Employment Practices Liability Insurance
EPLI protects your business against harassment, discrimination, and other rights violation claims brought about by current, former, and potential employees.
Business Income Insurance
Suppose your business is forced to slow or cease operation because of a covered peril. In that case, business income insurance can help pay for lost revenue, in addition to fixed costs like payroll, utilities, insurance, and so forth.
Workers’ Compensation Insurance
Worker’s comp covers your employees for On-the-job injuries or illnesses and helps pay for their medical bills, lost wages, disability benefits, vocational rehabilitation costs, and funeral expenses. In exchange for these benefits, employees agree not to sue their employer for damages related to the incident.
Related: Workers’ Compensation Insurance 101
Commercial Auto Insurance
Commercial auto insurance protects drivers, property owners, or other third parties against injuries or property damage caused by one of your business’s vehicles if your employee is at fault. Coverage includes lawyer’s fees, court costs, settlements, and judgments.
Suppose employees drive their personal vehicles in the course of business. In that case, you can purchase non-owned auto liability and add it to your BOP, which works as excess insurance if the employee is underinsured (or not insured at all).
Product Liability Insurance
If your company manufactures a product that causes bodily injury or other types of harm, this insurance can help protect against financial losses.
Data Breach Insurance
Suppose your customers’ and clients’ personal information is exposed in a hack or extortion. In that case, data breach insurance helps cover costs related to notifying your clients (and even the general public, if necessary), hiring a public relations firm, offering credit monitoring services to victims, and legal expenses.
Related: All About Cyber Liability Insurance
Directors & Officers Insurance
Suppose an employee, regulator, or other third-party misuses funds, fails to meet regulations, or doesn’t fulfill their official duties. In that case, directors and officers (D&O) insurance covers lawyer’s fees, court costs, settlements, and judgments.
Liquor Liability Insurance
If your business serves alcohol, liquor liability insurance protects you, property owners, and other third-parties against injuries or property damage caused by an intoxicated customer.
Home-Based Business Insurance
Instead of purchasing a standalone policy, you can add this endorsement to your homeowner’s policy to provide limited third-party liability and business equipment coverage.
How Can You Choose the Best Commercial Insurance for Your Business?
The bottom line is that your business’s unique combination of risks is what will ultimately determine the types of commercial insurance you should purchase. Here’s a high-level overview of which types might work best for different businesses:
|Best for These Businesses
|Those with a great deal of physical assets
|Service-based businesses (e.g., lawyers, accountants, consultants, notaries, real estate and insurance agents, insurance agents, hair salons)
|Business Owner Policy (BOP)
|Most small business owners who want to combine several coverages under a single policy
|Home-Based Business Endorsement
|Small businesses operated out of the home and with limited physical assets
|Businesses that manufacture and sell products
|Businesses that own or lease employee-operated vehicles
|Employment Practices Liability
|Businesses that employ others
|Those who want income support following a covered claim
|Those with employees
|Those that store sensitive client information
|Directors & Officers
|Added protection for a company’s directors and officers
|Liquor Liability Insurance
|Businesses that serve alcohol
Keep in mind that these coverages only address bare-bones exposures, and there’s no one-size-fits-all solution when it comes to business insurance, depending on your company’s industry, location, and operations.
How can you learn more?
IHS Insurance Group: The #1 Source for Protecting Your Business
To help you decide which types of commercial insurance you need, there are dozens of factors to consider. IHS Insurance Group has decades of combined experience helping businesses like yours acquire the coverage they need at prices that won’t break the bank!
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