If you are a new business owner or are planning on setting up your own business you may be wondering if you need commercial insurance. Below is a guide to what you need to know about commercial (business) insurance. What is is, where to get insured, what type of coverage you need and all about the different types of insurance available.
What is Commercial Insurance?
Commercial Insurance is simply business insurance, you purchase cover for your business as you would for your personal property. The difference is that a business has more risk factors and therefore needs additional coverage such as liability insurance and property insurance. These two are common but there are more types of insurance which fall under these two categories that are available and may be required depending on the type of business you run.
Does My Business Need Commercial Insurance?
In short, yes it does, if you are running and operating any type of legitimate business then you will need to have that business insured. If you do not ensure that your business has adequate coverage then your business and your investments and quite likely your livelihood are put at risk. Any business faces risks, common ones include damage and crime, fire, floods and other unexpected occurrences can cause considerable damages to a business and can put that business out of operation for several months. In the case of damages due to fire ect you will need coverage not only to cover the loss of products but also to cover such things as rebuild costs or demolition costs. Additionally having commercial insurance can cover you for business interruption, meaning you will not be at a loss if you are temporarily unable to operate your business.
Is Commercial Insurance Essential For Small Businesses?
Again, yes even small businesses need to be covered, even if you do not have any employees working for you, there are still things that need to be covered such as property insurance, if you are working out of your home you may need to change the insurance policy for your home as it is operating as a business too. Also you will most definitely need commercial liability insurance, this will cover you if you were to be sued by a customer or client and will also cover the legal fees and the fees associated with resolving the issue.
Which Type of Commercial Insurance Do I Need?
The type of insurance you need is dependent on the type of business you run. In general there are two main types, commercial property insurance and commercial liability insurance:
Commercial Property Insurance
This type of business insurance covers your company in the event of losses and damages. General property insurance will cover you in the event of fire damages, flood damage, theft of property and stock, glass insurance, builders risk, debris removal due to damage and so on.
Ordinance or law insurance falls under this bracket and it the insurance that will cover you in the case of rebuild or demolition of property after damages.
Inland marine insurance also falls under the commercial property insurance bracket and while it may sound like something that has nothing to do with your business, in fact it is the coverage you need for your property in transit, it covers all types of transportation of your property and is essential if you are moving your goods.
There are other types of specialist insurance that fall under this bracket that you may or may not need, depending on you business, some of these include fidelity bonds, where you are covered if a bonded employee steals property or money from the business and tenants insurance which is required if property has tenants as it is required that any tenants are partially insured.
Commercial Liability Insurance
This type of insurance covers your business for third party injuries that occurred in or were caused by your property or business. In short it covers you in the event that a client or customer sues you for damages. Liability insurance covers the legal fees such as the defense and resolving of your case. General liability insurance covers common risks such as when a customer is injured on your premises. Automobile insurance also falls under liability insurance and covers company vehicles. There are also specialist insurances that fall under this bracket such as:
Errors and Omission insurance (E&O) this covers inadvertent errors and failures that cause injury to a third party. It does not cover in the cases of poor judgment.
Malpractice Insurance covers the costs for medical practitioners in the event they are sued for malpractice, negligence or intentional wrongdoing.
Directors and Officials Insurance this type of cover is most commonly used by non profit organisations to cover the cost of lawsuits made against the directors and officers.
Where Can I Get Commercial Insurance Quotes?
It is not difficult to find quotes for commercial insurance, you can decide between a local insurance office and conduct your enquiries by phone or in person or you can get online quotes. You will be asked for details pertaining to your business to asses if your business is high risk, in most cases for first time businesses or businesses that have not made previous claims against their insurance policies, this is not an issue. It is advisable to gather a few quotes from different sources just as you would with personal insurance, you may be able to negotiate a deal if you are knowledgeable about the average prices for the basic cover you need.
Find a reliable licenced agent that specializes in Commercial Insurance and ensure that you get the cover you need for you business with out paying more than you need to or purchasing insurance that you do not need. Keep your expected business growth and development in mind when you are getting quotes so that you do not need to change your commercial insurance policy after a short time. All businesses insurance needs will change over time with expansion and growth but if you allow for your immediate expected growth this will avoid having to update your policy too soon.
