For companies and business owners to stay in business, they will need protection from commercial insurance. This type of coverage is also called business insurance, and it covers small and large businesses.
Commercial insurance protects businesses from unexpected financial losses caused by slander, accidents, property damage, lawsuits, vandalism, natural disasters, and other unforeseen circumstances.
If you examine commercial or business insurance more closely, you will discover that it covers different sections of businesses. Companies purchase insurance according to what or where they feel more vulnerable or exposed to attack and financial loss.
To understand it better, let’s examine the types of business insurance popular among companies and business owners and what each coverage provides.
Also Read: What is reinsurance? How it works, Benefits
What are the most common types of commercial insurance?
Under the umbrella of commercial insurance, we can find different types of coverage, they include:
- Liability insurance
- Automobile insurance
- Directors and Officers’ liability insurance
- Errors and Omission insurance
- Workers compensation insurance
- Property insurance
Liability insurance
Liability insurance covers a company or business’s financial loss from spoiling someone else’s property. For example, if a tree on the business or office premises falls and spoils the fence and the garage of your neighbor, liability insurance covers the financial loss.
Automobile insurance
Companies and businesses with a fleet of cars, trucks, or even vans use automobile insurance to protect and cover their businesses in the event of an accident involving the company’s vehicle. If the company’s vehicle destroys property or injures people during the accident, the coverage will cover the cost of repairs and replacements so far as it is in force.
Automobile insurance also covers vehicle theft. If this happens, the coverage will reimburse the company.
Directors and Officers’ liability insurance
This part of liability insurance covers the directors and officers from lawsuits against them and the ensuing financial loss. Many nonprofits go for this coverage to save themselves from money loss.
Errors and Omission insurance
This coverage is also known as E&O insurance. Hospitals often purchase this coverage E & O to cover mistakes, negligence, or errors on the part of doctors and medical teams during surgery or treatment. Patients who claim the doctor made mistakes in treatment may decide to file a lawsuit against the hospital or the medical team, but with this insurance in force, the medical will stay protected.
More so, businesses purchase this coverage to protect themselves from mistakes that lead to injuring a third party within their work environment. However, the E & O protects genuine errors that were not in any way close to being intentional.
Property insurance
Property insurance can take on many things under the coverage for businesses. It generally covers any property loss directly for firms in the event of a fire outbreak or natural disaster. Other things that could also go under this type of coverage include:
- Debris removal insurance
- Machinery and boiler insurance
- Crime insurance
- Glass Insurance
- Builder’s risk insurance
Workers compensation insurance
Employees are covered with workers’ compensation insurance should they get injured while performing their duties in the office or workplace. For example, an employee might get injured by a machine or equipment in the line of duty even when following safety measures. The insurance ensures that such employees get their full compensation.
How does commercial insurance work?
Businesses understand that careless risk can cause them financial loss that might force them to close down. Unexpected circumstances can also hurt the business.
This is why businesses hunt down powerful commercial insurance providers to purchase a policy that will protect them from these risks. The insurer will look at the business, determine risks that may likely happen, and decide on those that can be managed and covered.
The insurer and business come together to determine if the arrangement is in favor of both parties. That is, if the insurer will provide coverage in tune with the business’s needs and ensure that the business can pay a premium in line with what will be covered.
Conclusion
In conclusion, commercial coverage is one way businesses can stay afloat and continue providing their services to customers.
