how commercial insurance works
small business owners must carefully consider and evaluate their risks because they may have personal financial exposure in the event of a loss commercial insurance protects business owners from potential losses due to unexpected events that they couldn t afford to cover on their own this allows businesses to operate when it might otherwise be too risky to do so work with a reputable and licensed insurance broker if you need business insurance you can get a list of licensed agents in your state through your state s department of insurance or the national association of insurance commissioners commercial policies are different from personal lines insurance because they protect a business not an individual types of commercial insurancefederal regulations require certain types of insurance such as workers compensation additionally certain states may require certain types of businesses to have additional coverage types 1 in most situations it s advisable for business to protect themselves by having coverages that aren t legally required here are seven common types of business insurance commercial general liability insurance is a type of policy for all businesses it s considered comprehensive insurance although it does not protect against all risks general liability provides coverage for bodily injury property damage medical expenses libel slander defending lawsuits and settlement bonds or judgments unlike general liability insurance which is for any business professional liability insurance pli is designed for businesses that provide services coverage is for loss caused by the service provided it protects against expenses related to malpractice negligence or errors property insurance is designed for businesses with significant physical property such as equipment signage inventory and furniture it protects the business from losses in events such as fire storm or theft property insurance can cover for example damage to things like inventory computers furniture or signage commercial property insurance typically doesn t cover the costs of events like floods and earthquakes if your area is at risk for these events you ll need a separate policy if you re operating a home based business you will likely need additional coverage for equipment and inventory standard homeowner s policies don t typically cover home based businesses like commercial property insurance covers businesses you can add home based business insurance to a homeowner s policy as a rider for a small amount of coverage for equipment and a small amount of liability coverage a business owner s policy is an insurance package that is often ideal for small businesses and home based businesses it is essentially typical insurance options in one bundle so you can buy it efficiently and save money product liability insurance is designed for businesses that are involved with products such as manufacturers wholesale distributors and retailers product liability insurance protects a business from costs associated with damages caused by products such as a defective product causing bodily injury or harm without product liability insurance a business can be vulnerable to paying for expensive lawsuits any vehicles used for business should be insured whether you have vans busses tractor trailers or passenger cars you will need insurance in case of damage to the vehicles or cargo or injuries to others each state has a minimum amount of required insurance several factors can affect the price of vehicle insurance such as the driver s driving record and the condition of the vehicles business interruption or continuation policies are a type of insurance that is especially applicable to companies that have physical locations such as retail stores or manufacturing facilities business interruption insurance compensates a business for its lost income due to events that cause a disruption to the normal course of business it s typically added as a rider to a property insurance policy or as part of a business owner s policy policies may also include a civil authority provision that details compensation in the event of a government action that closes the business 