Commercial Insurance, Meaning and types

Commercial Insurance is a type of insurance policy that protects businesses against losses as a result of such things as damage to property and injuries to employees. Commercial insurance protects businesses against risks that could jeopardize their success. Some types of business insurance protect the organization’s reputation and well-being, while others protect its finances. Commercial insurance differs from personal insurance in that it covers multiple stakeholders and employees and has higher coverage limits.

Commercial Insurance, Meaning and types

Types of Commercial Insurance

There are many types of commercial insurance policies available to small business owners. The various types of commercial insurance policies provide cover for different aspects and segments of businesses. They  range from general liability policy to property insurance and employee coverage. 

Since there are different types of commercial insurance coverage, it is necessary to understand them and choose the proper type of coverage fitting for your small business. Therefore we’ll explain the various types of commercial insurance policies which are listed below:

  • General Liability
  • Property Insurance
  • Business Interruption Insurance
  • Workers’ Compensation Insurance
  • Commercial Auto Insurance
  • Employment Practices Liability Insurance (EPLI)
  • Cyber Liability Insurance
  • Management Liability Insurance (D&O)
  • Errors and Omissions Insurance (E&O)
  • Crime Coverage

Commercial Insurance, Meaning and types

General Liability

General liability insurance (GLI) is a type of insurance coverage that provides cover in the event that your business or company caused bodily injury or property damage. It is also known as commercial general liability insurance (CGL).

What does general liability insurance cover? 

General liability insurance policies typically cover you and your company for claims involving bodily injuries and property damage resulting from your products, services or operations. It generally covers damages that your business has caused to a third party. 

A general liability insurance policy can help mitigate claims that your business caused. For example, a customer may decide to sue your business if they get injured while in your premises. Thus the general liability insurance policy for businesses includes bodily injury liability coverage. This can cover medical bills if such an event occurs.  

If your business offers services at customers homes, there is the possibility of damaging parts of their property while rendering services. In this case, your insurance policy would cover for third-party property damage. Property damage liability coverage helps cover the cost of repairs or replacement of the damaged property.

Other examples include reputational harm and advertising injury. 

Related: Five Must Have Insurance Policies for small business owners

Property insurance

Property insurance provides cover against most risks to your company’s property, such as fire, theft and some weather damage. Commercial Property insurance typically protects properties owned by your business, such as buildings, equipment, store fixtures, and more. 

Commercial Property insurance also includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance, or boiler insurance.

Business Interruption Insurance

Business interruption insurance is a type of insurance that covers the loss of income that a business suffers after a disaster. The income loss covered may be due to disaster-related closing of the business facility or due to the rebuilding process after a disaster.

Workers’ Compensation Insurance

As a business owner, you are legally required to ensure the safety of your employees and workplace. However, accidents can still occur which could cause injuries to workers. With workers compensation insurance, you get coverage for medical costs and lost wages for work-related injuries and illnesses.

Affected employees will receive these benefits regardless of who was at fault in the accident. If a worker is killed while working, the workers comp provides death benefits for the worker’s dependents. 

Workers comp ensures the workers don’t lose wages while undergoing treatments and also protects the employer from being sued by the injured worker. 

Commercial Auto Insurance

This type of insurance policy provides coverage for vehicles owned and used by your business for its daily operations. It reduces financial costs that may be incurred in the event of damage to or by these vehicles and also covers for the medical treatment of the driver if there is an accident. It does not cover personal cars. Commercial auto is also called “commercial vehicle insurance”. 

Employment Practices Liability Insurance (EPLI)

This type of policy helps cover costs that arise when an employee sues the company for infringement of their legal rights or unlawful termination of appointment, allege discrimination based on sex, race and age. 

Cyber Liability Insurance

Cyber liability insurance provides a range of coverage for your business against data breaches and similar internet security issues. In today’s world, your business is more likely to suffer cyber attack as it grows, hence, it is advisable to be well and truly prepared for it before it happens. In the event of a cyber attack on your business, the Cyber liability insurance covers financial costs associated with remediation. 

Management Liability Insurance (D&O)

Management Liability Insurance typically helps protect the directors and officers in a business from costs that may result from lawsuits in the event of alleged mismanagement. It covers the costs associated with defending trading standards, environmental or other regulatory claims. 

Errors and Omissions Insurance (E&O)

Errors & Omissions insurance is a type of policy that covers against losses that are not covered by general liability insurance. E&O protects business owners and their businesses from claims that arise when a customer sues  mistakes or omissions in your services which result in a financial loss.

Crime Coverage Insurance

A commercial crime policy (or crime coverage) covers various types of business crimes: employee dishonesty; forgery or alteration; computer fraud; funds transfer fraud; kidnap, ransom, or extortion; money and securities insurance; and money orders and counterfeit money insurance.