What are the most common types of commercial insurance?
If you operate a business, you may be wondering how you can protect your assets, workers, and profit margin. The most common types of commercial insurance -- commercial property coverage, general liability insurance, and workers compensation coverage -- can help you do just that.
Commercial Property Insurance
Commercial property insurance provides coverage for a business's physical assets against direct physical loss or damage from covered perils. This includes the building itself, as well as personal property such as inventory, equipment, furniture, and computers.
The policy can also extend to cover damage to other people's property in your business's care, custody, or control.
Common covered perils include fire, lightning, explosion, smoke, windstorm, hail, vandalism, and theft. Certain perils like flood and earthquake typically require separate coverage or riders. Commercial property insurance helps businesses recover financially from unexpected events that could otherwise lead to significant costs for repair or replacement of essential assets.
Commercial property insurance can provide coverage for your business's place of operation, regardless of whether it's an owned building, rented space, or even a home-based business. It protects the building and the physical property inside.
General Liability Insurance
General liability insurance is designed to protect a business from financial losses resulting from claims of third-party bodily injury, property damage, or personal or advertising injury.
General liability is meant to cover situations like a customer slipping and falling on the premises, an employee causing damage to a client's property, or the business being accused of copyright infringement or libel in its advertising.
General liability coverage typically helps pay for legal defense costs, court fees, settlements, and judgments, regardless of whether the business is ultimately found liable. It is considered a foundational insurance policy for most businesses, helping to mitigate the risk of the most common, and potentially devastating, lawsuits.
Workers Compensation Insurance
Workers' compensation insurance, known as workers comp, is required in many states. Even if you only have a single, part-time employee, you may be required by law to carry workers' compensation insurance.
Unlike other forms of commercial insurance meant to protect your property and profits as a business owner, this form of insurance is designed to protect your employees if they become injured or ill due to their work.
Workers' comp insurance benefits provide medical care, temporary disability benefits, permanent disability benefits, supplemental job displacement benefits, and death benefits. These benefits ensure that employees receive necessary medical treatment and wage replacement during their recovery.
Did you know? In 2023, California passed a law requiring all licensed contractors to carry workers' compensation insurance, even if they don't have employees.
BOP: Business Owners' Policy Combines Essential Coverage
For many business owners looking to save money on these most common types of commercial insurance, a Business Owners' Policy (BOP) combines general liability and commercial property coverage into a single policy, potentially offering cost savings for eligible businesses.
While it won't affect your workers' compensation costs, which are calculated based on how employers are classified according to their operations and the rate assigned to each corresponding employer classification, a BOP may provide a cost-effective option to save on commercial insurance premiums.
To learn more about what types of insurance are best for your business and to get a quote for commercial insurance, contact your trusted insurance professional.