How Commercial Insurance Differs From Residential Coverage

Insurance Blog

Anyone running a business should be interested in acquiring commercial insurance. If this is your first time shopping for it, you may not be clear on how it differs from insuring your house. Here are four differences all customers need to know.

Liability for Commercial Activities

When you insure your residence, you're mostly insuring the structure and getting some degree of liability against injuries folks might suffer while on the property. In the business world, there are forms of liability that extend far beyond personal injury claims. You might be sued for failing to deliver on a contract or misrepresenting a deal. In other words, your everyday profit-seeking activities may create exposure to civil liability claims.

Need for More Policies

Commercial insurance coverage tends to be much more granular than what you'll see on the residential side of the industry. Your default assumption when working with a commercial insurance agency to set up a policy should be that anything unstated isn't covered. For example, don't assume your fire insurance policy will cover the loss of any inventory that goes up in the fire. You'll likely need to set up policies separately to cover things like professional liability, premises liability, fire risks, and commercial losses.

This can extend to insurance for company officers and even your employees. It's not uncommon for companies to have policies that indemnify officers if they're found liable for certain corporate activities in the course of their duties. Some companies go as far as acquiring life insurance policies for key employees to hedge the risk of losing critical talent.

Liability Limits

Given the money involved in most commercial activities, you can expect the liability limits to be higher. This is a plus for you as the policyholder because it means you'll be covered to higher levels for damages sought by third parties. If someone runs a trucking company, for example, they might need commercial insurance for the cost of goods damaged in transport. Not making their customers good on the loss could entail major long-term business risks, and the higher limits reduce the odds that a single loss will harm the business.

Higher Deductibles

While limits are higher, deductibles tend to be higher for the same reasons. Most businesses set aside enough money to cover the deductibles on what would be their most expensive concerns. Especially with a low-probability scenario, this is a good way to hedge your risk without incurring heavier premiums.

For more information, contact a commercial insurance agency like United Counties Insurance Group.

29 September 2020