Commercial Business Insurance
Owning, running or managing a business in today’s economy isn’t only challenging; it’s also a risky endeavor.
The world we live in is full of unforeseeable and often disastrous circumstances, many of which have the potential to grind business to a halt, or worse, shut it down for good.
From natural disasters to litigation and malicious cyber attacks, the risks are both real and ever-present. That’s why commercial business insurance is so important.
Despite the need for insurance, many business owners don’t have a good grasp on the difference between policies, when they need them, or what they cover.
To make matters more difficult, there isn’t a “catch-all” policy that covers everything for your business. Meaning you need to both understand and seek out specific types of commercial business insurance to “insure” against various threats or possibilities.
This guide will help introduce you to the basics of commercial insurance, and what types of policies can be explored as a way to reduce your exposure and protect against various risks.
First Up, What is Commercial Insurance?
Whether you’re a budding startup or an expanding business with multiple locations, there are a number of insurance policies that your business may need.
Commercial insurance is a “catch all” term used to describe a collection of various policies aimed at mitigating risk and protecting businesses from damages and liabilities that may result from a range of different threats, risks or circumstances.
What Does Commercial Insurance Cover?
The specific risks a commercial business insurance policy covers will be dependent on the “type” of policy you have, as well as what is detailed in your policy’s rider.
Because each risk is unique, many businesses need multiple insurance policies in order to provide their business with adequate coverage.
Some risks a business insurance policy may cover include:
- Bodily injury
- Property damage
- Errors or omissions
- Natural disasters
- Acts of war/terrorism
- And more/…
Types of Commercial Insurance Policies?
- General Liability
General liability policies are one of the most common coverage options taken out by businesses. These policies cover a broad range of claims an individual or other business make against your business.
How It Works
Coverage includes that for claims of bodily harm or property damage while on location/premises of your business. This policy also generally covers liability that may arise from goods or services sold, or as a result of business operations.
- Cyber Liability
According to Norton, a leading cybersecurity firm, the US is the number one target for cyber-attacks with the average cost of a breach running at $7.91 million. For SMBs (small businesses) this cost ranging between $84,000-$148,000.
Cyber policies protect against liabilities that arise as a result of a cyber attack.
How it Works
In the event of a cyber attack, this policy will cover against liabilities such as a data breach, stolen credit cards, legal fees, restoration of operations, credit monitoring for customers, extortion and more.
- Errors and Omissions
This policy was created to serve professionals that provide services and protects against any damages that arise from the advice or information you provide.
How E&O Works
In the event that a client claims that your services or advice were inaccurate, incomplete or flawed in some way that resulted in damages this policy can provide coverage for damages and attorney fees.
- Business Owners (BOP) Policy
A BOP policy combines both general liability and commercial property insurance providing a broader scope of coverage under the umbrella of a single policy, and are often a great cost saving option for those businesses needing additional coverage.
How it Works
These policies protect against the combined risks covered by both commercial property insurance and general liability policies.
- Directors and Officers Liability
Often referred to as “D&O” policies, this type of insurance covers company directors and officers of an organization, limiting damages caused to the business as a result of director or officer actions or behavior.
How it Works
Payments for this policy may be made by either the officers or directors personally or by the company. In the event that upper management is faced with legal action or accused of wrongful action while under the employ of the company, this policy will cover defense and other associated costs, thus limiting the company’s financial exposure.
- Employment Practices Liability
Also known as “EPLI” insurance, these policies protect your company against claims surrounding employment and HR practices.
How it Works
In the event that a current, former or prospective employee claims discrimination, wrongful termination, sexual harassment or retaliation, an EPLI policy can provide financial coverage for associated damages, legal representation and any agreed upon settlements.
- Professional Liability
Professional liability policies, also sometimes referred to as “malpractice” or “errors and omissions” insurance is best suited to cover professional service providers from liabilities that arise from mistakes, errors or negligence.
How it Works
No one is perfect. Humans make errors. But sometimes those errors or oversights can cause damages. In the event that a professional makes a mistake, this coverage can help protect against damages that arise from that mistake. For example, a surgeon makes a mistake during an operation, or a web designer makes an error in coding that causes the client’s site to malfunction.
- Workers’ Compensation
Workers’ compensation insurance, also often referred to simply as “workers comp,” is a necessary policy for those businesses with employees. These policies and requirements are regulated by the government.
How it Works
This type of coverage protects both workers/employees and their employers (businesses) by providing financial support for payouts to any employee that suffers from illness or injury during or as a result of their employment with the business.