Commercial business insurance is a mode to protect businesses, it’s owners, and employees in the event of financial misfortune. When it comes to business, there are different categories, niches, and no-one-size-fits-all insurance policies, especially for small business owners. For example, a gift shop has a different insurance requirement than a car shop. The difference in requirement has led to business owners' policy, which includes coverages such as general liability insurance, commercial property insurance, and crime insurance under one package.
Commercial insurance policies are chosen by business owners based on the risk assessment of the company. The owner evaluates the maximum risk the company can get into and the type of protection it may need. As such, business owners have the liberty to choose an insurance policy industry-wise.
Commercial business insurance protects against financial loss, live-fire claims, and other events that affect day-to-day business operations. Without commercial insurance, companies will have to pay out of pocket in the event of a liability claim or a disaster.
Types Of Business Insurance
Uncertainties are not quantifiable neither predictable. As a business owner, it is imperative to have commercial insurance coverage. Having commercial insurance directly implies conducting good business.
No one is invincible, and you will not be above the fray without insurance. Insurance policies are not limited to manufacturing, logistics, construction, textiles, and telecom. Commercial insurance offers a safety net to safeguard business operations and assets when there is a need.
There are different types of business insurance available, matching the suitability of each business niche. Read on to learn more!
1. Property Insurance
The most common type of commercial insurance is property insurance. Damages to your commercial properties are covered under the property insurance. For example, fire destroying your office space will be covered under property insurance.
2. General Liability Insurance
Any form of business has a defined set of liabilities, be it limited or unlimited. General liability insurance covers a business in case a product or service has caused potential harm to the client and further leads to serious damage. In such cases, client lawsuits are common, and businesses require protection. There are also high litigation fees involved in defending the lawsuit; as such, for a company to afford its defence, it is important to have general liability insurance.
The insurance also covers clinical trials, product recall, infrastructure damage, product liability, workers compensation, and the like.
3. Shop Owners Insurance
Small to medium-sized shop owners take the benefit of this insurance cover. It is a tailor-made policy to cover possible risks and damages experienced by small shop owners. The policy provides financial protection against the property insured and any other insured interest of the business. Shop owners and owners of small to medium-sized businesses are protected from the probable risks of burglary, natural disaster, and theft.
4. Office Package Policy
One of the most sought-after insurance policies, the office package insurance covers damage against machinery breakdown, fire, burglary, etc, as a comprehensive full-fledged insurance package. It is considered a one-stop solution for all business contingencies.
5. Commercial Auto Insurance
For business owners operating a fleet of vehicles or making use of a vehicle to deliver products, commercial auto insurance is the saviour. It protects against property damage, liability, and bodily injuries if an employee suffers an accident while using the insured vehicle during business hours.
6. Professional Liability Insurance
Many times when a client is not satisfied or experiences damage by use of the product or the service, there are lawsuits introduced to claim damages against the business. Professional liability insurance offers coverage in such cases. Clients are suing a business for professional services rendered if the product or service caused bodily harm or property damage. It is different from general liability insurance, as general liability does not offer coverage under lawsuits filed by clients.
7. Data Breach
Most small businesses are easy targets for cybercriminals. In certain cases, tech experts or cybercriminals attack small business databases that lead to a complete loss of information. A data breach policy helps cover the loss of the business if the business files confidential information about clients and staff electronically.
8. Business Owners Policy
Small business owners make use of this policy and include property as well as liability protection under the coverage. The package helps in cases where a client or an employee has sued for poor business practice.
9. Workers Compensation
It is considered a must-have insurance policy and also required by the law. Worker's compensation extends insurance coverage to the employees of a business if they suffer injuries while performing a work-related task during working hours. Workers' compensation insurance covers a bad fall, medical conditions like carpal tunnel syndrome - allowing the employee to make an expensive claim.
10. Directors And Officers Insurance
If the directors and officers of a company take decisions affecting the business, its profit, and revenue - they can find themselves in a lawsuit if caught in a legal situation. The loss so incurred by the company is covered by the director's and officer's insurance.
There are several other corporate insurances businesses undertake to meet ends; for example, professional indemnity, trade credit insurance, fidelity guarantee, consequential loss, and marine cargo insurance. In some cases, Keyman insurance also falls within the purview of commercial insurance, which acts as a protection against sudden death/disability of a key person of the business. Multinational corporations offer employee medical insurance to cover employee’s hospital and medical charges.
Why Does A Business Need Commercial Insurance?
Commercial insurance includes protection under several policies, namely equipment breakdown, workers compensation, employee benefits, commercial auto insurance, business interruption - all intended to protect the owner and the employees from financial ruin.
A business providing group life insurance also falls under commercial insurance in the same way as surety bonds do. Surety bonds are extended by the business to ensure that contractors adhere to the terms of a contract.
Small companies need commercial business insurance, especially if business operations are carried out in a rented commercial space. Clients across the globe prefer the presence of general liability insurance in terms of the contract while signing deals.
Additionally, peace of mind is of extreme importance, although it is underrated. There is no denial of the fact that businesses run on risks. But not all risks are calculative. Risks are not always in the form of an unpleasant project. On the contrary, a project offering promising returns is not worth rejecting, right? Such is the task of commercial business insurance.
If a business has a location open to the public, operates on a rented commercial space, works closely with clients and customers, and deals with client property as a part of business operation - it is important to have commercial business insurance and safeguard all such factors from a mishap.
Construction industries mostly go by mandatory commercial business insurance; however, it is not forced by the law. The certificate of insurance acts as proof of the general liability of the business and helps banks, customers, and property managers to work in peace, keeping in mind that they won't be stuck with dues if they go into a lawsuit against the business.
It is of extreme significance to secure your business as an entrepreneur, given the unanticipated even that happen to a business. These occasions can annihilate your business activity, and you may wind up scrambling to cover the misfortune.
Running a business in India is not an easy task. There are several challenges, and the only thing you can do as a business owner is to combat them. If you fall into the gravity of the situation, the financial health of your business will surely be affected. Commercial business insurance is a blessing in disguise.
Use it to protect your business and your employees.
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Q. Is it possible to have cyber insurance?
Ans. Cyber insurance fall under data breach, although it can be opted separately. Cyber insurance helps overcome threats such as ransomware, malware, and other cyber-crimes.
Q. Is commercial business insurance cost-effective?
Ans. Honestly, yes. Business insurance is a safe and cost-effective way when compared with an unfortunate incident destroying years of hard work.
Q. Does the director’s liability insurance extend to personal liability?
Ans. Yes, in the event of a wrongful act in their professional tenure.