Commercial Insurance Coverage

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What is Commercial Insurance?

Commercial or business insurance is insurance intended to insure businesses for the insurable risks they face. Insurable risks because not all risks can be insured against. Because the types of businesses and operations are too numerous to count, there are many different kinds of commercial insurance.  Here are some examples:

1. General Liability

2. Business Property

3. Business Auto

4. Trucking/Motor Carrier 

5. Workers' Compensation

6. Professional Liability

7. Director & Officer Liability

8. Cyber 

9. Employment Practices Liability

10. Intellectual Property Insurance

11. Employee Benefit Liability

12. Ocean Marine

13. Inland Marine

14. Crime

15. Environmental/Pollution Liability

16. Business Management Liability

17. Third-Party Discrimination

18. Equipment Breakdown

19. Garage Liability

20. Garage Keepers Legal Liability

Commercial insurance is available in many forms to suit the requirements of many industries. Regardless of what kind of small business you own, you likely want to know what business insurance you need. Use this guide to learn more about standard commercial insurance policies.

Common Business Insurance Coverage

Commercial insurance carriers and agents are trained to recognize business risks and threats. Business risks dictate the coverage provided in each of the available policies. Personal insurance covers people, their belongings, and potential personal liability. Business insurance is similar, except it is meant to cover those same things and more for commercial enterprises.  Let's explain the common coverages:

General Liability

General liability insurance protects businesses from third-party bodily injury and property damage liability claims and lawsuits. This policy includes limited coverage for expenses associated with "personal and advertising injury," such as wrongful arrest or detention, invasion of privacy, wrongful eviction, slander, libel, and copyright infringement.

Property Insurance

Property insurance covers your building, contents, equipment, furniture, fixtures, stock, inventory, and loss of business income.  Lost income must be a direct result of building damage caused by a covered peril (fire, wind, vandalism). Property coverage is typically categorized as basic (named peril), broad (named peril), or special form (all risk subject to exclusions).

Workers’ Compensation

Business owners may think they don't need workers' compensation insurance because they don’t have the number of employees that make a policy mandatory. Don’t make this mistake.  Even if your state only requires your business to purchase a policy if you have more than a certain number of staff, maybe three or four. Realize that the employer is still responsible for paying the benefits due to an injured employee under your state’s workers’ compensation law.  Workers' compensation insurance is recommended if you only have one employee.  Don’t forget about yourself, the business owner who can get hurt on the job.  Before you file that rejection, consider the benefits you are giving up.  

Worker’s compensation benefits are not capped by a dollar amount limit, and for a permanent disabling accident, you’ll wish you were covered.  

Without workers' compensation, the costs of compensable employee injuries can quickly rise, and most businesses don’t have the cash to pay. Even in the safest and most controlled environments, injuries will happen. It's best to be prepared for any eventuality, even if it seems like it will never happen.

Commercial Auto Insurance

Purchasing a commercial auto insurance policy can be a cost-effective method for protecting your business from the liability arising from at-fault auto accidents. If your company has vehicles titled in the business name, then business auto insurance is required.  Even if the other driver involved is ticketed by law enforcement, many states have comparative negligence, and blame does not always go to the ticketed driver.  The other driver may be 70% at fault, and you were not given a ticket but become 30% at fault.  When that happens, your insurance will have to pay for 30% of the damage after the adjusters from both sides are finished.

Employment Practices Liability Insurance (EPLI)

Your business might want to consider employment practices liability insurance (EPLI) if you have employees. EPLI is insurance designed to protect employers from employee lawsuits.  It covers claims of sexual harassment, all types of discrimination, wrongful termination, hostile work environment, failure to promote, and more.  When these allegations arise, an employee usually files a complaint with the US Equal Employment Opportunity Commission (EEOC). If, after review, the EEOC determines the allegation has merit, then the employee proceeds with a lawsuit, with a good chance they will win. An employee can file suit without review by the EEOC, but with the EEOC investigation and results, it may be easier to win.

Cyber Insurance

Small companies may be more vulnerable to cybercrimes because they may have less cyber security protection than larger companies. Cyber insurance will pay for various types of losses or claims, not just due to data breaches. A data breach often leads to the theft of customer records, Social Security numbers, and driver's license numbers, increasing the likelihood of identity theft for those whose information was compromised. 

Cyber policies are highly customizable and can include coverage for:

Third-Party Coverage

1. Incident Response Costs 

2. Legal and Regulatory Costs

3. IT Security and Forensic Costs

4. Crisis Communications Costs

5. Privacy Breach Management Costs

6. Third-Party Privacy Breach Management Costs

7. Post-Breach Remediation Costs

First-Party Coverage

1. Funds Transfer Fraud

2. Theft of Funds Held in Escrow

3. Theft of Personal Funds 

4. Extortion

5. Corporate Identity Theft

6. Telephone Hacking

7. Push Payment Fraud

8. Unauthorized Use of Computer Resources

9. System Damage and Rectification Costs

10. Income Loss and Extra Expenses

11. Hardware Replacement Costs

12. Forensic Accounting Services

Business Management Liability Insurance 

Management Liability Insurance covers various risks related to the actions of directors, officers, managers, and business entities. The coverage includes Director and Officer Liability, Employment Practices Liability, Fiduciary Liability, and Crime Insurance. A Management Liability package policy is available for private companies and nonprofit organizations. In contrast, publicly traded companies usually opt for stand-alone policies due to higher exposure to potential claims and lawsuits.

Errors and Omissions Insurance (E&O)

E&O insurance is called professional liability insurance for a reason. It is designed to safeguard businesses and their professionals from the consequences of an error or omission while providing professional services. Companies that provide a service for a fee should obtain professional liability insurance, as it covers claims excluded under a traditional general liability policy.

The real estate industry, legal professionals, insurance agents, financial advisors, architects, engineers, and designers, should have errors and omissions insurance. It will cover client claims alleging your professional service caused them a financial loss. It does not apply to bodily injury or property damage claims covered under general liability insurance. 

For the medical field, this insurance is usually called Malpractice Liability, and the coverage differs in that this coverage obviously would cover bodily injury resulting from medical care. 

Crime Coverage

Commercial crime coverage protects businesses from employee criminal acts and third-party crimes, including theft of cash, securities, and other property. This includes employee theft, fraud related to computerized funds transfers, financial impersonation, check fraud, forgery, and acceptance of counterfeit money.