Running a business is like walking a tightrope: It’s exciting, and yet it comes with risks. Plus, you can’t foresee most of the perils, which is why you need the right commercial insurance. Some of the most common business risks include business interruption, property damage, theft, and workplace injury. Take note that this risk could potentially lead to huge financial losses. For example, according to the Small Business Association (SBA), over 50% of all civil lawsuits in the U.S. target small businesses, with litigation costs hitting six figures in some cases. It is worth noting that litigation may also cause emotional hardship. One of the best ways to protect your business from business risks is to carry the right commercial insurance policies. Some of the most important commercial insurance policies include:
Commercial General Liability (CGL)
Commercial general liability insurance protects your company in case a third party (any entity or person from outside your company) sues you. A CGL policy helps you settle the legal costs in addition to the award or settlement. A standard CGL policy provides coverage against property damages, false advertising, libel and slander, and third-party bodily injuries. Additionally, it covers legal costs including, among others, legal defense costs and settlements, compensatory damages, and non-monetary damages. It is worth noting that this policy covers both class-action and individual lawsuits.
Some of the notable exclusions in a standard CGL policy include personal property, employee injuries, and professional liability. The average cost of premises liability is about $54,000, according to the National Center for State Court’s Civil Litigation (NCSC) model. With such a high cost of claims, your business well-being is hinged on you getting a suitable commercial general liability insurance policy.
Commercial Professional Liability Insurance (CPL)
Also known as errors and omissions insurance, commercial professional liability insurance protects your business when a client or customer sues you for being negligent when providing professional services. The policy pays for your legal costs as well as settlements or judgments. CPL insurance providers coverage against violation of good faith, negligence, misrepresentation, and inaccurate advice. If your business entails providing expert advice, recommendations, or physical care that exposes your clients, customers, or patients to risks, you need this type of insurance.
In some states, lawyers and doctors are required by law to have this type of policy, but other professionals, like financial advisors, real estate agents, insurance agents, IT consultants, accountants, architects, and engineers, can also benefit from professional liability insurance.
Commercial Product Liability Insurance
A product liability insurance policy protects you against legal claims made against you due to damages and injuries that relate to a product you make, sell, or transport. General liability insurance usually covers product liability, but the coverage is generally limited. A product liability insurance plan provides you with more specific protection against product-related lawsuits. Businesses that deal with products, such as distributors, manufacturers, wholesalers, and transporters, can benefit from commercial product liability insurance.
Commercial Property Insurance
Although the specific coverage terms vary from policy to policy, commercial property insurance typically covers physical losses caused by accidents, vandalism, fire, theft, and natural disasters. Property insurance is especially useful if you have a storefront or a physical location. This type of commercial insurance covers your business assets as well as third-party property damage resulting from a named peril. Take note that you can include commercial property coverage in your umbrella insurance plan.
Commercial Umbrella Insurance
Commercial umbrella insurance or excess liability insurance is a type of umbrella policy that covers liability costs that exceed the limits of your primary commercial liability policies. For instance, if you’re sued and the liability cost comes to $3 million, but your general liability insurance only covers $1.5 million, commercial umbrella insurance can cover the shortfall. While you don’t have to get an umbrella insurance policy, it can be invaluable, especially if your employees work in high-risk conditions or if you’re involved in a high-liability or high-risk business.
Home-Based Business Insurance
The gig economy has been expanding rapidly in recent years, and thus there are more home-based businesses than ever before. Unfortunately, conventional home insurance doesn’t provide adequate coverage for home-based business owners and workers. This is because it doesn’t cover equipment, operations, and company files. A home-based business insurance plan covers your cash, equipment, stock, goods in transit, and contents. In case you’re unable to work due to an insured event like a fire or hurricane, your insurer will compensate you with a pre-determined sum for a given period.
Workers’ Compensation Insurance
Workers’ compensation insurance protects your employees through a compensation plan that covers the costs associated with a workplace injury, illness, or death. The compensation plan can also replace part of their wages as they recuperate. Also, this type of insurance can pay compensation to an employee’s family in the event of a work-related death. In most states, workers’ compensation is mandatory for businesses with more than one employee, while in some states an employer needs to employ a certain number of individuals in order to be legally obligated to carry workers’ compensation, per the Insurance Journal. Other types of commercial insurance include commercial data breach insurance, commercial auto insurance, and business identity theft insurance.
Commercial insurance is inherently complex. However, if you consult an independent and reputable agency, you can get competitive pricing, support, and an insurance plan that covers all your commercial risks. The team at Hoffman Brown Company is always looking out for you. For tailored insurance policies, get in contact with us today by calling (818) 986-8200.