Commercial Insurance 101
Understanding Commercial Insurance
Whether it’s a home-based business or a thriving company with changing needs, you as a business owner will need to manage your liability and business interruption risks.
As a business owner, large or small, you could be held liable for damages should your property get damaged, someone gets hurt, or a mistake is made. It’s important to know what exposures your business has and what kinds of policies can help address them. Business insurance does not have to be confusing if you know what you’re looking for.
Below are is a commercial insurance guide to help get you started on business insurance.
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What is commercial insurance?
Commercial insurance, also known as business insurance, is a broad range of policy options designed to protect your business from financial loss. It provides protection to both the property you own and the liability arising from the damages you cause others. Each business has its own unique set of risks therefore your insurance should be tailored to your type of business and specific needs.
How commercial insurance work?
Commercial insurance is typically a 1-year contract between the business owner and the insurance company. The insurance company agrees to provide financial protection in the event of a specific loss in exchange for premium payments.
This negotiated amount of money is generally determined by the amount of property you own, payroll, annual sales, commercial vehicles, or the liabilities you are exposed to. Oftentimes, the limits can be decided based on requirements that your landlord, vendors, or project partners need you to comply with.
What types of business insurance does a business need?
As a business owner, you might be thinking: what types of business insurance do I need? The answer varies depending on a variety of factors, such as:
- The industry you operate in
- Your trade
- Type of business you run
It will also be influenced by the size and location of your business and your appetite for risk. It can be difficult to choose the right coverages for your business. At the very least you as a business owner should be familiar with the below types of commercial insurance:
General liability insurance
- Helps cover a wide range of possible damages and legal expenses related to claims arising from bodily injury, property damage, or personal or advertising injury.
- Learn more→
Commercial auto insurance
- Provides liability and physical damage protection for vehicles that are used for work or business purposes such as cars, trucks, and vans.
- This coverage is important because your personal insurance policy will not cover third-party claims in an accident you or one of your employees cause with a business-owned vehicle.
- Learn more→
Workers’ compensation insurance
- Provides medical coverage and wage replacement to employees for work-related injuries or illnesses.
- Most states require businesses to have workers’ compensation insurance.
- Learn more→
Commercial property insurance
- Protects your commercial building and your business assets in the case of damage or loss.
- It can pay for repairs or replacement costs of stolen, damaged, or destroyed business property (such as the building, equipment, and inventory).
- Learn more→
What determines the cost of business insurance?
There are several factors that go into determining the cost of your business insurance, including:
- Your industry and type of business
- Your location
- Value of your business property
- Years in business
Business Insurance may be required by:
Mortage Lenders | Landlords | Client Contracts | State Laws
Other insurance coverage for a commercial operation
Depending on the type of business you are in you may want to consider other types of insurance as well such as:
Professional liability insurance
- Protects your business from claims of malpractice, negligence or errors related to a professional service.
- Professionals that typically carry this coverage include:
- Engineers
- Architects
- Accountants
- Consultants
- Many more
- Learn more→
Cyber security insurance
- Provides broad coverages to help protect your businesses from various technology-related risks such as exposing your customers or client’s personal information in a data breach or similar situation.
- If you store lots of sensitive information about clients or customers, then you will want to add this coverage to your policy.
- Learn more→
Small Business Commerical Insurance coverage from SouthPoint Risk
SouthPoint Risk is a full-service independent insurance agency serving customers throughout the southeast and nationwide. As one of Tennessee’s largest independent insurance agencies, we offer a wide array of personal insurance and commercial insurance.
From our specialized workers’ compensation coverage to our flexible group benefits and comprehensive life insurance, we can help protect your business from a variety of risks.
If you need help assessing your business risks, need more information, or would like help getting coverage give us a call at 615-356-3212 or complete an insurance quote form here.
Not sure what insurance your business needs?
Quick Terminology Guide
Certificate of Insurance (COI): A document that indicates that a business has insurance coverage and states the limits of your coverage. In some cases, it is required to have a COI (usually in design or construction).
Claim: A formal request made by an insured individual or business to their policy provider (insurance company) to pay for a loss that is covered in your insurance policy.
Actual Cash Value: An amount determined by taking the replacement cost of an object and subtracting the depreciation value.
Replacement Cost: An amount required to replace property without subtracting a depreciation value.
Named Peril: The specific event causing a loss, such as fire, windstorm, or accidental death. The perils must be specifically listed within the policy or they may not be covered.
Premium: Money paid on behalf of a company to an insurance company in order to be insured against a peril or loss.
Deductible: The amount of money your company is responsible for paying before the insurance company’s coverage begins. For example, if the company has a claim for $12,000 and the deductible is $2,000, the insurance company will pay $10,000 on that claim, and the insured will pay the $2,000 deductible.
Endorsement: A document that revises the terms and conditions of a policy; also known as a rider, the endorsement can add or subtract coverage depending on its language.
Sub-limit: A limitation in an insurance policy on the amount of coverage available to cover a specific type of loss.
Insurance Policy: A document that outlines important information such as your coverage limits, exclusions from coverage, how to file a claim, and so on.
Limit of Insurance: The maximum amount of money that your insurance company will pay out for losses during the policy period (the length of time that an insurance contract is valid).
Want to learn more important terms to help you understand your business insurance? Click here!
