Unlike personal insurance, commercial insurance is used by companies to protect their businesses and staff in general. Commercial insurance policies come in different forms to cater for differences in size and activity of businesses.
Therefore, for example, a cargo freight company would require different types of insurance policies from that of a bank. As such, it is typical for the majority of companies to purchase insurance policies that suit their needs. This type of insurance provides an all-in-one package that caters to a combination of typical liability insurance and commercial insurance policies.
Definition
Commercial insurance is a combination of insurance policies created to provide adequate protection to businesses, their staff, and shareholders. A typical insurance policy usually covers liability, property, general crime, and vehicle insurance. It also covers additional insurance policies, which include business stoppage, equipment damage, and staff compensation.
Consolidated life insurance, dental insurance, and vision insurance are other types of insurance covered by commercial insurance. Construction bonds, which are used in the construction industry, are also covered under the commercial insurance policy.
Common Types of Commercial Insurance
As stated earlier, there are several types of commercial insurance policies. Several of these are critical to the successful operation of businesses, although some are considered optional or non-essential. The common types of commercial insurance include the following.
- Corporate Liability Insurance
- Corporate Property Insurance
- Vehicle Insurance
- Business Stoppage Insurance
- Equipment Damage Insurance
- Staff Compensation Insurance
- General Crime Insurance
- Cyber Insurance
1. Corporate Liability Insurance
Corporate liability insurance, also known as general liability, is an insurance policy that businesses use to cover for corporate activities such as attorney expenses, medical costs, and other costs that businesses incur. It also covers injury compensation, abuse, and investigation costs. This form of insurance is a must-have for all businesses.
Insurance companies usually offer a variety of insurance policies, which can be modified to meet the demands of different companies. Supplementary commercial insurance plans can also be added to the corporate liability policy to meet the exact requirements of different businesses.
It is essential to know that although corporate liability insurance has a wide range of coverage, it does not cover deliberate damage, vehicle damage, and personnel injury.
2. Corporate Property Insurance
Corporate property insurance is another vital insurance policy that all businesses should acquire. It protects all physical assets owned by a business. These assets include buildings and indoor/outdoor fixtures. In the event of windstorm damage, fire outbreak, or other natural catastrophes, this type of insurance can provide a robust framework that can support a comprehensive recovery in the effect of a closure.
Like other insurance policies, corporate property insurance comes with different types of packages depending on the requirements of businesses. Furthermore, standard insurance policies only cover frequent damages from fire, wind, and other everyday occurrences.
Other additional policies may be required for more significant events such as earthquakes and landslides. The amount of money paid through corporate property insurance is determined based on two methods, which are the Actual Cash Value and the Replacement Cost.
3. Corporate Vehicle Insurance
The corporate vehicle insurance is used to protect all the cars, and vans a business may own or rent. It is a crucial insurance policy required to protect businesses from liability in the event of possible accidents. This type of insurance policy covers possible liability against owned, rented, or leased vehicles. Also, it covers vehicles used by employees for personal and business purposes.
In the event of an injury resulting from an accident, the corporate vehicle insurance policy would help cover health and legal monetary liabilities.
The corporate vehicle insurance policy is mandatory in almost all jurisdictions. Additionally, like all other insurance policies, insurance companies offer different packages for corporate vehicle insurance. For businesses with large fleets of vehicles, more comprehensive insurance policies are advised.
4. Business Stoppage Insurance
This type of insurance policy helps to cover businesses in the event of an external influence that forces a company to shut down. Such an insurance policy offers protection in the event of an interruption to any of the required utility services, which include electricity, internet, and water supply.
This protection helps to keep companies in business by covering for the amount of revenue loss during closure due to an external disaster. Additionally, it also covers running expenses such as salaries and taxes, which helps to ensure continuity.
Nevertheless, in the event of a utility disruption that occurs outside the facility that leads to a business suspending its operations, the business stoppage insurance would not provide coverage for such losses.
5. Equipment Damage Insurance
Equipment damage involves damage to devices and production equipment due to an electrical fault or a mechanical problem. Therefore, the equipment damage insurance provides insurance coverage to businesses in the event of equipment damage.
This type of insurance usually covers different types of devices. It is used to cover repair or replace damaged or faulty machinery. Additionally, it covers expenses and losses incurred during a breakdown.
6. Staff Compensation Insurance
For the personnel of a business to perform at an optimal rate, a significant amount of protection against liability is crucial. Hence, the staff compensation insurance policy is used to protect workers and ensure productivity during an unforeseen event.
The type of events that provides cover for include injuries due to accidents, psychological issues with electronic devices, and other physical or none physical impairments.
7. General Crime Insurance
The general crime insurance policy is crucial to protect a business against losses due to various criminal activities. These activities include forgery and burglary. Businesses that have a higher probability of sustaining losses due to criminal activity are advised to take out criminal insurance to protect their operations and revenue. The general crime insurance covers common theft, dishonesty within the staff, forgery, and electronic fraud.
8. Cyber Insurance
Cyber-attacks are increasingly becoming sources of financial losses for businesses all around the world. This problem increases as the internet continues to grow. The cyber insurance provides coverage to businesses in the event of a computer attack. Protection is vital to mitigate the devastating consequence of such attacks.
