Commercial Insurance: Different Types

Different Kinds of Commercial Insurance

As with all insurance, commercial insurance exists to provide protection from different kinds of financial loss by unpredictable or unforeseen calamities. With commercial insurance, the entity that wants to be protected is not an individual but a business. This is insurance that is specifically geared to the needs of businesses.

Things that can be covered under commercial insurance include:

Injury to workers

Otherwise known as worker’s compensation (“worker’s comp”). This is to compensate workers for injuries they sustain while on the job. It is the employer’s responsibility to cover the cost of healthcare and lost wages that may result from an injury to a worker while that worker is performing their job. In some states it is actually required by law that a business carry insurance for the purpose of worker’s compensation. In return for receiving worker’s comp benefits a worker may not sue their employer for negligence.

Commercial automobile insurance

This is to cover vehicles owned by a business. If any vehicle in a fleet owned by a company has an accident then there is coverage just as there is with an insured vehicle owned by an individual.

Malpractice insurance

Any professional whose work entails protecting the health and safety of others may be liable for injury or death to customers or (in the case of medical doctors) patients. Malpractice insurance covers the costs of a legal defense against charges of negligence and any settlements or judgments that may be levied against the professional/business owner.

Theft insurance

This type of commercial insurance covers any property owned by the business against theft. The coverage is applicable whether this theft is internal, meaning committed by an employee, or external, committed by someone not working for the business.

Business interruption coverage

What happens if a fire or tornado causes a business to cease operations for a period of time? Property insurance will only cover damage to the premises on which the business is located. This is where business interruption insurance comes in. During a period where there may be no income to cover expenses, this coverage takes care of salaries and other costs that may be incurred even though the business is not earning money.

Commercial renter’s policy

This covers rented property on which a business is located. Many commercial leases stipulate that the business owner renting the property must carry a certain amount of insurance. The renter is liable for damage to the building in which the business is operated. Any damage to the property that occurs during the tenancy of a business falls under the coverage of this type of commercial insurance policy.

Fidelity bonds

In certain types of businesses it may be necessary to bond employees. A fidelity bond is a kind of commercial insurance policy that protects a business from any damages or losses caused by its workers. In a business where an employee may be in a position to steal or embezzle from clients, a business owner may seek this kind of insurance in case of any malfeasance on the part of that worker. This reassures both the client and the employer even if wrongdoing never occurs.

Professional liability insurance (also known as errors and omissions insurance)

This type of insurance protects a business against any damages resulting from a charge of negligence. For the damages to be covered they must be found to be the result of error as opposed to other more deliberate forms of negligence. Losses caused by genuine mistakes during the performance of a job are covered by professional liability insurance.