By Amber Delotsang
Commercial insurance needs can vary significantly in business-to-business. Just as your business is unique to others in the market, so are your business’ insurance needs. A basic commercial insurance policy is a great place to start, however, you may need additional or specialized coverage.
A basic business insurance policy should include some property and liability coverage. These are standard and essential coverages for many small companies. Depending on what your business does, you may also need commercial auto insurance or if you have employees, your state may mandate workers’ compensation insurance. There are many types of commercial insurance.
The bottom line is: if you own a business, you need to understand the common types of commercial insurance so that you can best protect your venture.
A BUSINESS OWNERS POLICY (BOP)
Huh? What’s that? A BOP bundles different types of business protection into one plan. BOP’s are usually very affordable. They can help businesses save because they provide multiple types of commercial insurance, and the cost is usually lower than it would be if a business-owner bought the coverages separately.
If you are considering a BOP, be sure to carefully look over the policy before committing to it. Auto insurance, professional liability insurance, and workers’ compensation are not included in the typical BOP. Deciding if a BOP is the right option really depends on the characteristics of your business.
BUSINESS PROPERTY INSURANCE
Business property insurance covers any damages to your business property. These policies are generally meant to protect structures and inventory, such as an office, warehouse, furniture, machinery, products, or documents. For that reason, business property insurance is suitable for service and retail businesses.
However, not every policy will properly cover all of your property. You can purchase additional property coverage if needed. Some examples of coverage not always included in a basic policy are income coverage, builder’s risk insurance, boiler and machinery insurance, and crime insurance.
According to TrustedChoice.com, a business with huge risks could end up paying $250,000 a year for a property insurance policy. On the other hand, a major corporation could have a $ 500,000-year policy, while a small business owner only pays $500 a year.
Each and every business is different, and several factors play into assessing the amount of coverage needed. Fortunately, an insurance agent can help you determine the right coverage for your needs.
GENERAL LIABILITY INSURANCE
He said it, she said it, and we said it: with a business comes a lot of liability. All businesses need some form of general liability insurance. Make sure you have enough liability coverage or you could find yourself in a pickle!
General liability insurance covers an array of damages or injuries to third parties or their property. In the case of a lawsuit, liability insurance policies will cover most if not all of the costs.
You should consider add-ons if you need more coverage than a general liability policy offers. Some additional coverage options are malpractice insurance, errors and omissions coverage, commercial auto insurance, and cyber liability. Some liability insurance is important even if your business is completely web-based.
If with a business comes a lot of liability, then liability insurance is going to cost me, right? Not necessarily. Insureon.com analyzed data from policies sold to over 18,000 small businesses (10 or fewer employees) in 2017. The agency found that the average, annual cost of General Liability Insurance for 2017 was $741 a year, over 50% of their sample of small business owners paid for policies that cost between $400 and $600, and 21 percent paid less than $400.
TrustedChoice.com reported numbers for larger businesses: liability policies can cost small consulting firms $3,000 or more a year and can be over $15,000 a year for higher risk businesses such as landscaping.
COMMERCIAL AUTO INSURANCE
If you use any vehicles for work, you need commercial auto insurance. Work vehicles include company owned delivery vans, utility trucks, or any other vehicles owned or used by the business.
According to Trustedchoice.com, the average yearly commercial vehicle rates are as follows:
Tractor Trailer: $2,500+
The vehicle type, the risks associated with what you are moving, and more, affect your premiums. If you have a solid driving record, a simple vehicle, and don’t drive to far, your rates will be lower. Check if you qualify for discounts and stay on top of fluctuations in your needed coverage.
Worker’s compensation insurance covers your employees if they are hurt while on the job. Many state laws mandate businesses with employees to purchase a workers’ compensation policy. If you have employees, you should highly consider this if it is not required by your state.
It’s important to do whatever you can to keep your workplace safe. Pekin Insurance highlights the importance of having workers’ compensation insurance regardless because you can’t have complete control over the state of your workspace or the actions of your employees.
Additionally, workers' compensation laws will often protect the employer from negligence lawsuits. The best thing to do is to not be negligent.
THE MAIN THINGS TO CONSIDER
Is a package policy right for you? Maybe if you only need a base level of coverage. For example, BOPs are great for small businesses.
How well established is the commercial insurance at the agency I am looking at? You want to go to an agency and speak to agents who are experienced and knowledgeable in commercial insurance, Like the agents at The Huttenlocher Group.
Don’t take it with a grain of salt (“it” being the process of assessing your business risks). It’s really important to be thorough and to search for the right coverage for your business. There might be coverage out there you didn’t know existed. Some other coverage options that certain agencies offers are product liability and garage keeper’s liability. Business interruption insurance is another one; it covers loss of funds when a business is forced to close.
THE BOTTOM LINE
Whether you get a package policy or buy property and liability insurance separately, you need commercial insurance and it must be suitable for your specific business.
Commercial insurance for a smaller, less-risky business is going to cost less than it will for a large, hazardous business. However, you can lower your rates if you get a certificate proving you meet property and safety standards and choose your insurer and policies wisely.
That’s where having the help of a knowledgeable professional comes in handy. Find a reputab