What exactly is “property & casualty” business insurance?
Sometimes referred to as a Business Owner’s Policy (BOP), commercial property & casualty insurance is a general term for several different policies designed to protect a business from financial loss and liability.
Each property & casualty policy is specifically tailored to the specific business that it covers.
Every industry and every market has specific risks and liabilities. In addition, the size of the business, number of employees, number of states it operates in, as well as location (if the business is located in an area with a high risk of flooding or other natural disasters, for example), all play a role in determining the type of coverage that is needed.
What policies are most often used for commercial businesses?
Commercial business insurance covers dozens of risks and liabilities under many different policies.
In general, liability policies include product liability insurance, malpractice insurance, workers compensation, errors and omissions (E&O), and general liability insurance.
Commercial property insurance includes commercial building and vehicle insurance, loss of income insurance, accounts receivable insurance, and equipment breakdown insurance.
Some policies provide specific loss or theft coverage, such as cyber-crime insurance and records retention.
Insurance companies also offer property and casualty packages for specific industries, which are policies tailored to their unique needs and requirements. This includes packages for restaurants, hair salons, dry cleaners, transportation and delivery services, and construction.
What is general liability insurance?
Liability insurance protects your business from legal liability. Liability insurance includes protection from “slip and fall” lawsuits, where a customer injures themselves while on your property due to dangerous conditions (such as wet floor). It also protects against consumer lawsuits over injuries or damage caused by faulty products or services (otherwise known as product liability coverage).
Liability insurance also protects business owners from lawsuits because of professional services rendered to your clients.
For instance, it can protect doctors and medical professionals from medical malpractice lawsuits in the event of a patient’s death or injury because of an unsuccessful or faulty procedure. This is also known as medical malpractice insurance.
Overall, liability insurance covers you and your employees from lawsuits over injuries or damages from incorrectly performed -or failed- services. This applies to any service-related industry: plumbing, general contracting, medicine, cosmetics, etc.
What is commercial property insurance?
Property insurance covers your business property and assets, which could include commercial buildings, storefront properties, and storage, should something unexpected happen.
What is Commercial Property Insurance?
It also includes things such as machinery, equipment, supplies, and inventory.
Your property insurance policy potentially covers anything tangible and necessary to the operation of your business lost in the event of a fire or natural disaster.
What is workers’ compensation coverage?
Workers’ compensation covers medical expenses and a portion of lost wages for employees who become injured or sick while on the job. Coverage may also include employee physical therapy, mental health, and death benefits.
An employee only receives benefits if their injury relates to their job. Workers’ comp insurance covers injuries caused by demanding physical labor, dangerous or wet conditions, or being exposed to hazardous chemicals or fumes.
Keep in mind that in nearly every state, workers’ compensation is on a no-fault system. This means that it doesn’t matter if your or your employer’s carelessness causes the injury or who is at fault. What matters is if the injury or sickness happened while the employee was working.
If an employee is injured while not doing work responsibilities, like while riding a motorcycle, workers’ compensation insurance won’t cover them.
What is business interruption coverage?
A business income policy helps pay bills and covers costs if your business has to close temporarily due to a catastrophic event, like a fire. In the event of a disaster that closes your business temporarily, business income coverage would reimburse you for the net income that would have been earned if the event never happened.
This includes things such as rent, payroll, and other monthly business expenses.
Also, expenses needed to rebuild and restore operations may be covered as well.
This type of insurance also covers a move to a temporary location if necessary.
Business interruption insurance also may cover events other than disasters that temporarily close your business. For example, should the local government temporarily close down a street where your storefront business is located, you may be covered, depending on your policy. Some policies also temporarily cover economic or other business-related events, such as the loss of a major client or supplier.
What is crime insurance?
As the name implies, crime insurance protects your business from damages resulting from criminal acts. This includes theft, robbery, and vandalism.
It also covers crimes committed by your employees, like embezzlement, forgery, or economic or property damage.
It may cover cyber-crimes too, like online hacks that compromise the personal information of clients and customers.
This is increasingly popular coverage for many businesses, as the release of customers’ personal information has caused some companies heavy economic and reputation damage.
What is an umbrella property & liability policy?
An umbrella commercial property policy provides extra coverage to the original liability limits in the event of a catastrophic loss.
For example, if a natural disaster, such as an earthquake, destroys the commercial building you own and all the equipment in it, the damages will probably exceed the limits of your original policy. Without umbrella liability insurance, you could be permanently out of business.
An umbrella policy gives you peace of mind knowing that all your business property is covered even in the absolute worst-case scenario.
Umbrella commercial liability insurance also provides extra coverage to your liability policy for lawsuits or judgments filed against you.
For example, if an injured customer successfully sues your company for $2 million, but your original policy has a liability limit of $1 million, your umbrella policy covers the additional $1 million.
Considering the stakes, having a commercial umbrella insurance policy is worth it. Sometimes it only costs a few hundred dollars per year in premiums. However, umbrella insurance isn’t offered as stand-alone coverage. It is included as one part of your overall commercial business insurance policy.
Do I need business insurance?
You absolutely need business insurance!
Do you have any of the following?
- own or lease business property
- own or lease equipment or machinery
- own or lease vehicles for business use
- have customers or clients on your property
- have employees
- sell any type of service or product that could potentially cause damage or harm if misused or done incorrectly
Then you need business insurance!
Without it, you expose your business to catastrophic risk that could permanently put you out of business and cause you to be liable for millions of dollars in damages or losses every single day. This leading to personal bankruptcy and financial ruin.
Are some policies legally required for my business?
In most instances, the answer is yes. The law requires workers’ compensation if you plan on having any employees.
Some states require certain professional service licensees to carry professional liability insurance, while others require companies to carry disability insurance for their employees.
States typically have stiff penalties for employers who do not purchase workers’ compensation insurance.
Every state is different and has its own unique set of workers’ compensation laws that employers must follow. Be sure, then, to check all the legal requirements and regulations of your state before starting a business.
How much does commercial property & casualty insurance cost?
The cost entirely depends on the industry, market, location, and size of the business. Just a few hundred dollars per year can insure a small, home-based business. Large, public corporations, however, can spend millions protecting their assets and future.
The anticipated cost of losses determines your policy premiums. The insurance company estimates how much they will need to pay out in the future to cover losses under your policy. They will closely examine every factor of your business in doing so.
Factors such as:
- if your business is located in a high crime area
- your location is at elevated risk of a natural disaster
- you are in an area experiencing high unemployment
Pricing also includes workers’ compensation estimates. This estimate considers:
- the number of employees you have
- the type of work they do (IE how dangerous it is)
- the industry and market you operate in.
The higher the risk involved in running your business, the higher your premium will be.
How do I make a claim?
Before your business suffers a loss or damage, you should have an insurance agent personally assigned to you. This will be the first call you make in the event you need to file a claim.
Your insurance professional will take down all the information you provide about the incident, including your statement.
The insurance company will then assign an adjuster to review the details of the claim to determine whether the loss is covered under your policy.
Your agent should be your personal representative through the entire process – from claim through to payment. The agent’s primary goal will be to ensure that your claim is processed as quickly and seamlessly as possible, understanding that the most important objective is to minimize the effect of the damage or loss on your ability to continue to run your business.
I have a home-based business, do I still need property & casualty insurance?
This is a tricky question, and the answer is a solid “it depends.”
Many personal homeowners’ policies utterly prohibit the use of the home for business use and will not cover any equipment or supplies used for business within the home.
This includes all physical files, computers, phone lines, shipping boxes, and all inventory.
If you primarily work out of your home office and provide a service/product or have customers or clients visit your home for any reason, you probably need commercial property and casualty insurance.
Do I need commercial auto coverage if I use my personal vehicle for business?
In most cases, personal auto insurance policies will not cover losses or damages sustained when the vehicle is being used for business purposes, even if it is your personal vehicle.
It makes sense, then, to make sure you have coverage for your vehicle while conducting business.
This includes driving for a rideshare company like Uber or Lyft, making deliveries, or simply visit your clients as a salesperson (for example, a real estate agent).
Having commercial auto coverage will also cover you in case any employees use your vehicle and get into an accident as well.
How do I get commercial insurance coverage?
Much like insurance policies to cover your home and vehicle, you may begin the process by contacting insurance company professionals like us. We have many trained, expert agents who have experience with nearly every type of company and market.
Simply talk to us about your business, including things such as the location, number of employees, and products or services involved.
Be forthright and honest about your business, and don’t be afraid to ask questions – that is what the agent is there for.
That way, your agent will be able to examine all aspects and potential risks involved with your business and provide you with several coverage options to help find the right policy for you.
We’re here to help! Call us today.
Now It’s Your Turn
I hope You Understand Property and Casualty Insurance: 15 Common Questions by Business Owners
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