Breaking Down the Different Types of Commercial Insurance Coverage

Commercial insurance helps businesses manage losses caused by accidents, theft, or natural disasters. It can also cover claims for property damage or professional mistakes during normal business operations.

There are four types of commercial policies. These include general liability, property insurance, business auto insurance, and a Business Owner’s Policy (BOP). Each of these has coverage limits and deductibles to consider.

General Liability

This is the most common type of commercial insurance coverage, covering various situations that might result in lawsuits. This includes bodily injury, property damage claims, and legal expenses related to slander, copyright infringement, and false advertising. Notably, general liability policies do not cover negligence resulting from a company’s professional services; professional liability policies typically cover these claims.

Whether a customer is injured on your premises or by your business’s products, or an employee is injured while on the job, those incidents can cost you a fortune in medical and legal costs. That’s where General Liability insurance, or commercial general liability (CGL) insurance, comes in. It pays for the financial costs of unforeseen incidents while helping your company maintain its reputation and guard against potential bankruptcy. In addition, CGL insurance can also pay for the cost of repairs or replacement for third-party property damaged by your company’s operations.

Property Insurance

Unlike liability coverage, which protects you from financial losses related to the actions of your business, commercial property insurance pays out if your actual physical assets are damaged. This can include everything from a stolen laptop to an onsite fire. In many cases, commercial property insurance policies will also cover lost income from a business interruption resulting from the loss of physical assets.

Like general liability, commercial property policies can be rated in several ways to determine risk accurately. For example, a manufacturing company might be placed on revenue, while a construction firm could be rated based on payroll. These methods ensure a policy is priced appropriately and financially viable for businesses that may purchase it. However, all policies are different, and the risks of your business will differ from those of any other. This is why speaking with an insurance expert and exploring your options for a customized commercial property insurance policy is essential.

Business Auto Insurance

Like personal cars, homes, and health plans, businesses require policies to protect them from events that can devastate their assets and liabilities. Unlike private insurance, commercial insurance is typically customized to match a company’s unique day-to-day operations.

For example, if your business uses trucks for deliveries, you’ll need a commercial auto policy to cover accidents. And suppose your employees drive their vehicles for business purposes. In that case, you can add hired and non-owned auto coverage to your business insurance to ensure they’re covered in case of an accident.

Lastly, you can also add professional liability, which helps pay for damages caused by malpractice, negligence, or errors in your work. Insurance companies use different rating methods and factors to determine a company’s risk, including policy limits (per-occurrence or aggregate limit), coverages, and exclusions. The type of business, location, and number of employees will all affect your pricing. A knowledgeable agent can help you customize your business insurance to fit your needs.

Business Owner’s Policy (BOP)

A business owner’s policy – or BOP – is a property and general liability insurance package that insurers offer to small and mid-sized businesses. These policies help cover the most common risks a small business may face, including damage to commercial property, liability lawsuits, and income loss from unforeseen events.

Generally, a BOP can be more cost-effective than buying individual policies for each risk type. However, certain businesses will need additional coverage besides the standard offered by a BOP. For example, some companies will need commercial auto or workers’ compensation insurance that typically doesn’t come with a BOP.

The best way to determine whether a BOP is right for your business is to talk with an Embroker advisor. We have experienced commercial insurance specialists ready to discuss your business’s needs and help you find the right insurance coverage for your unique risks. Could you request a free quote from us today? We will reply promptly and provide a detailed breakdown of your coverage options.

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