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The Complete Guide to Commercial Insurance


Learn about the different types of commercial insurance available and work out what type of business coverage you need for your company with this comprehensive guide.

Quick References

Why do businesses need commercial insurance?

Insurance in business is a non-negotiable and protection is the number one reason why businesses need commercial coverage. Even if you work alone with no employees, you still to buy commercial insurance. Making sure you have adequate cover for your business liabilities at the right level is fundamental; it offers peace of mind for you, your customers, suppliers, and employees. Aside from this, it can help safeguard the future of your business should you face legal action of any kind.

With so many types of commercial insurance on offer, and equally as many business insurance companies to choose from, it can be a challenge knowing the right type of commercial coverage you need for your company or line of work.

Different Types of Commercial Insurance


Commercial General Liability Insurance


What Is Covered Under a CGL Policy?

Commercial General Liability insurance provides coverage that safeguards your business from any third-party claims for a financial loss, as a result of medical expenses, advertising injury, bodily injury, property damage, libel, slander, electronic data liability, lawsuit defence and the settlement of any bonds or judgement. It also provides coverage for the actions taken by both temporary and permanent members of your team.

Although CGL coverage is considered to be a comprehensive type of insurance for a business, it will not provide coverage for everything.


What Is Not Covered Under a CGL Policy?

Commercial General Liability will typically not cover you for employee injuries, personally identifiable information, professional liability, personal property, pollution claims, corporate directors and officer’s liability or workers compensation. Finally, any legal action which does not involve a claim for personal injury, damage to property, bodily injury or advertising injury will not typically be covered either.


Who Needs CGL?

Any size or type of business.


What levels of coverage are there with a Commercial General Liability Policy?

Insurance companies that provide commercial general liability coverage will give you a number of levels to choose from. Different companies offer different options. For example, one policy could include product liability coverage as standard, whereas another may charge more for this. Another provider may include business premises coverage as standard, and another will not.

Aside from this, most insurance companies will usually give you the option to purchase excess liability coverage to cover and claim amounts that could potentially exceed any limitations you have in place — with something as important as this, taking the time to discuss your requirements and business operations in full with a commercial general liability insurance agent. This way, you can ensure that you are only paying for coverage that is necessary for your company.


Commercial Professional Liability Insurance


What Is Covered Under a CPL Policy?

Commercial Professional Liability coverage is also referred to as Errors and Omission Insurance, E&O cover or commercial indemnity insurance. It is designed to protect your business in case of legal action that is taken out against you for negligence in the provision of your services. Irrespective of whether you were at fault, you need CPL cover in place to safeguard your business just in case somebody decides to sue you.


What Is Not Covered Under a CPL Policy?

It will not typically cover any employee injuries, intentional wrongdoing, false advertising, disputes in the workplace, illegal acts, general liabilities or property damage.


Who Needs Professional Liability Coverage?

Any size or type of company that provides a service of any kind or which gives advice to its customers. In some cases, a corporate client might insist that you have commercial indemnity coverage in place before they contract to your service.


Commercial Product Liability Insurance


What Does Product Liability Insurance Cover?

Regardless of how well-engineered a product is, oversight and accidents can occur. With a commercial product liability insurance policy, your business is given essential protection should things go wrong. It can help to protect against any claims for damage or injury, which may arise from the use the products you manufacture, distribute or sell.

Product Liability coverage will usually be included as part of a general liability policy, but it can also be purchased as a standalone option. For a company who manufactures a product that is potentially hazardous, these present a far great risk. As such, obtaining product liability from a standard insurance company could be a challenge; and in these cases, a speciality insurer would need to be found.


What Is Not Covered with Product Liability?

The exclusions for this type of cover differ from one insurance provider to the next. Make sure you check the exclusions on any policy documentation first.


Who Needs Product Liability Cover?

If you manufacture, distribute or sells products, you need to have product liability coverage in place. If you are business or freelancer that repurposes or repairs products, then you’ll need it too.


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Commercial Property Insurance


What Does Product Liability Insurance Cover?

Most types of commercial property insurance will safeguard your business in the eventuality of a covered loss. While individual terms may vary from one provider to the next, you will typically get coverage for accidents, theft, fire, vandalism, and in some cases natural disasters. The typical items that are covered include the building, signage, inventory, equipment, furnishings, landscaping, fencing, and other people’s property. You might also get commercial property coverage included as part of an umbrella policy.


What Is Not Covered with Product Liability?

Typically, there is no legal cover included in this type of policy.


Who Needs Product Liability Cover?

If you lease an office or retail unit, are a homeworker, or you have a commercial building, then you should buy commercial property insurance to cover the building along with assets of the business. If you rent our space to other people on a commercial basis, then you would also need this type of cover.


Commercial Umbrella Insurance


What Does Business Umbrella Insurance Cover?

Commercial Umbrella Insurance can provide you with an extra layer of financial protection. It is also known as excess liability insurance. An umbrella policy acts as a safety net for any unexpected liability costs. They are designed to give you a coverage that bridges the gap when the pay-out levels of any existing commercial insurance policies are depleted.


What Is Not Covered by Umbrella Insurance?

An umbrella insurance policy is a supplemental policy and is not available on a standalone basis. Typically, this type of policy will exclude personal liability and punitive damages claims. Other exclusions may include data breaches and hacking, product recalls, pollution, watercraft, and aircraft.


Who Needs It?

This is not a compulsory requirement for businesses. However, if your employees are exposed to danger, are in a high-risk or high-liability trade, or employees are in danger, this cover could prove to be invaluable. Another reason that companies buy umbrella insurance is that it is usually a more cost-effective way to enhance your insurance limits.


Home-Based Business Insurance

With the gig economy exploding in recent years, there is an increasing number of companies that are now set-up as home-based businesses. A typical home insurance policy will not provide the right type of coverage for home-workers. This is primarily because it will not cover your company files, operations, and equipment.


What Does Home-based Commercial Insurance Cover?

A home-based business insurance policy provides coverage for your business stock, equipment, contents, goods in transit, and cash. If an insured event was to occur, such as a flood or a fire; and you are unable to work as a result of this event; this type of coverage will pay for your loss of income, up to a pre-determined amount for a set time period. In most cases, this will be for a maximum of 12-months.


What is Not Covered by Home-based Business Insurance?

While it is possible to buy a business insurance bundle that combines a range of types of commercial insurance, a stand-alone home-based business policy does not include general liability coverage.


Who Needs Home-Based Commercial Insurance?

Any home-based business, regardless of the size or type. If you have a home-based business, and you visit clients, then you might also need to consider GLC.


Commercial Workers Compensation Coverage


What Does Workers Compensation Insurance Cover?

Workers Compensation is a type of insurance to make sure workers and employees get fair compensation in a timely manner for any employment-related injuries or diseases. The majority of states require that you pay for any loss in income, medical care, and death benefits for your employees. Some of the most common forms of work-related illnesses include:

  • Fall, Trips, or Slips

  • Repetitive Strain Injury

  • Strains

If you do not have and workers compensation coverage, the liability to pay would fall under the company or yourself. Aside from this, there could also be strict penalties issued by the state depending on the local laws.


What Is Not Covered by Workers Compensation Insurance?

As with a lot of types of commercial insurance, the policies between companies and the laws between states will vary. Always check the finer details before you accept commercial insurance of any kind. As a general rule, these instances are not covered by workers compensation policies.

  • Heart attack

  • Contraction of an ordinary disease ‘of life.’

  • Horseplay resulting in any injury

  • An injury that occurs while the employee is intoxicated or under the influence of drugs

  • Workers who suffer from an injury after they start a fight

  • Injuries sustained while committing a crime or violating a company policy

  • Injuries which occur out of an Act of God


Who Needs Workers Compensation Coverage?

The legal requirements are different in different states. For instance, in Alabama, only those companies who have five or more employees are legally obliged to buy this type of insurance. However, in Alaska, the lower legal limits are different, and employers with a single worker need to buy this type of insurance.

Here is a useful link to a state by state comparison for workers compensation insurance liabilities.


Commercial Data Breach Insurance


What Does Commercial Data Breach Insurance cover you for?

This is one of the more modern types of commercial insurance products and one which is paramount if you are a business that handles private or sensitive client data. Commercial Data breach coverage is designed to safeguard your business should you become the victim of a malicious attack or you experience a data breach that impacts your company’s computing equipment and your network.

The coverage is provided for your company information along with your network and the computer systems. The specifics of what is covered will be outlined in your policy documentation. However, these are the most typical elements.


Ransomware

If somebody tries to hold your organization to ransom, insurance will typically cover any ransom you might need to pay, along with the cost of the services for a risk consultancy firm who can help you handle the event itself.


The cost of the breach

This covers the cost of any practical support you might receive, which could include, but is not limited to legal advice, forensic investigations, and there will also be the cost of informing regulators and clients, along with the provision of ongoing monitoring of credit for those customers who have been impacted.


Crisis containment

Support is given towards mitigating the damage. In the case of a data breach, a rapid response, wherever possible, is fundamental. This quick and decisive action can help to limit the damage to the overall reputation of your company. 24-hour crises press services and communication strategies development are also given. Coverage for crisis containment is not always included in all commercial data breach insurance.


Business interruption

This compensation covers any loss of income or the cost of any downtime that could be incurred as a result of the data breach.


Media or multimedia liability

This can protect your business if you infringe any copyright or IP infringement regulations.


Hacker Damage

If a cybercriminal or hacker causes damage your company’s programs, your website or any electronic information, then the cost of the restorative or repair work is provided.


What is Not Covered Under Commercial Data Breach Insurance?

Data breach insurance is not intended to replace adequate data security on your network. You will be expected to have measures in place, and that if security patched or upgrades are available for the products and services you use to secure your network, that these are updated. If not, and your security measures and controls are not up to date; this could invalidate your policy.


Who Needs Data Breach Insurance?

Any size or type of company business that has a website operates aspects of its business online or holds sensitive customer data.


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Commercial Life Insurance


What Does Commercial Life Insurance Cover?

Depending on the commercial life insurance company you use, there are different levels of coverage with different payout levels. The coverage offered will usually provide keyman insurance, shareholder protection, death in service payments and relevant life insurance.


What Is Not Covered By business life insurance?

These types of insurance policies can be tailored for individual purposes. Most companies give you the opportunity to add-on specific elements of coverage that are important to you.


Who Needs Commercial Life insurance?

This is by no means a compulsory product, but it provides increased shareholder confidence as just on advantage. In some instances, where a loan is taken out, or you work with VCs, they may insist you buy commercial life insurance.


Commercial Dental Insurance


What Does Business Dental Insurance Cover?

Commercial Dental Insurance is usually offered at different levels, with the different tiers of coverage proving a range of dental benefits to employees. Offering this type of insurance can help your employees to manage the cost of their routine and emergency dental treatments. Coverage is usually included for oral cancer, along with international dental treatments which could arise when they are away on vacation.


What Is Not Covered by Commercial Dental Coverage?

Depending on the level of cover you decide to offer your employees, there will usually be a number of pre-existing dental conditions that are not covered. Exclusions are also put in place for an initial period for things such as oral cancer cover. This period is usually 6 months, but it could vary depending on the specific insurance company you choose.


Do you need to offer commercial dental coverage to your staff?

This is another type of commercial insurance that is not compulsory. Any size or type of business who wants to offer it to their employees is free to do so. It can help employers attract and keep hold of key members of their team, but it is not a legal requirement.

Choosing the Best Insurance Broker or Agent for your Commercial Insurance Needs

Just like any important business partnerships, find the best commercial insurance agent is not a task that should be rushed. Ideally, referrals from people you know and trust are a great way to know first-hand if a commercial insurance agent is a good fit for your business. However, it isn’t always possible to get referrals from your network. Cost is also considered to be one of the most important factors, too, but this should not be the only factor you consider.


Benefits of a Commercial Insurance Agency

Finding a commercial insurance agent whom you can easily communicate with, and you offer all of the types of business insurance you need is half the battle. Having to deal with a single company for all of your insurance needs adds value to the equation for you both.

  • They will save you time by dealing with multiple commercial insurance companies on your behalf

  • They will take the time to understand what you need commercial coverage for

  • They will usually have a significant level of experience in this field

Unlike dealing with commercial insurance companies direct, a business insurance agent will be able to deal with different insurance companies on your behalf.


Questions to Ask a Commercial Insurance Agent or Broker?

Always take some time to ask a few questions before you make a final decision about who buy business insurance from. Understanding a bit about their background, who they typically work with, and how established they are can often bring reassurance that they understand the industry your business operates in.

The ability to reach them when you need them, and to be able to communicate with them easily cannot be underestimated. Some business owners like to know that they can deal with a local person that they can speak to in-person in the eventually they need to make a claim. For others, this factor is not so important. However, these points are all worth thinking about before you buy commercial insurance for your company.


Questions to Ask Your Insurance Broker or Agent

As we’ve already mentioned in an earlier section, there are a number of things you should try to find out about your insurance agent before you buy commercial insurance for your company. These questions can help you easily gauge whether or not an insurance provider is a good fit for your business or not.

  1. Will the company you are speaking to handle your business directly? If not, who will?

  2. How long have they been in business and do they have local representation in your state/town?

  3. How many clients do they work with?

  4. How do they help their clients in the event of a claim?

  5. Are their insurance policies customizable?

  6. Are they only contracted to work with specific insurance companies?

  7. Do they offer any additional services besides commercial insurance?

  8. Can they offer all types of commercial insurance?

  9. Do they work with any other clients in your field of work?

  10. How can you contact them, and what are their hours of operation?

Although some of these questions might seem a little standard, if you weigh up the pros and cons of different commercial insurance companies who offer similar pricing, these questions can quickly tell you who will offer you the most support in the event of a claim, who you can contact more easily, and who has the experience of dealing with customers who are similar to yourself.

Sure, it might take a little time, but this approach should help you find the best commercial insurance company or agent for your individual needs.

In Summary

There are so many different types of commercial insurance on offer, and there are always going to be lots of options for whom to buy business insurance. Understanding the type of coverage you need for your business, and then finding a company or agency who can give the best support, competitive pricing, and the breadth of coverage you need is key.



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