5 Types of Commercial Insurance: Which Does Your Business Need?

Fran
Fran Majidi
May 24, 2019

If you’re thinking of starting a business or already have one, you might be aware of the importance of having business insurance. Often, a reliable and trustworthy agent will take the necessary steps to truly customize a plan to ensure that you never have a major setback, even when disaster strikes. Each insurer also offers different packages, sometimes lumping together commercial property insurance with general liability insurance. This makes perfect sense because each business has unique needs which depend on a specific industry. Commercial insurance was designed to protect not only a business but its owners and employees, who may be held responsible for costly damages. While there are variations on how different commercial policies are sold, the coverages remain the same. We’ve broken down the 5 main types of commercial insurance that most small and mid-size businesses need to have.

  1. Commercial Auto Insurance:

    Does a plumber who uses a car to reach clients need commercial vehicle insurance? Yes. Does a furniture store need commercial vehicle insurance for its fleet of delivery vans? Yes. How about a semi or a dump truck? Yes, and you could argue that the marketing professional who works as a consultant and drives to various clients needs commercial car insurance too. Each business is different. Sometimes, executives of a company use a company car for their commute to and from work (while driving their Benzes, Teslas and Porsches on weekends). With the help of a reputable agent, you’ll know how much protection you need for your vehicle(s) so you’re not paying more than you need to spend.

    What Is Commercial Auto Insurance? Commercial auto insurance is liability and physical damage protection, much like regular auto insurance, but for the express use of work-related activities. Covered cars are often insured separately because they are exposed to more risk than a regular car, SUV or truck used for personal purposes. People who drive for Lyft or Uber do not need commercial auto insurance. They should, however, buy rideshare coverage to protect themselves during that in-between point where the driver is not insured by the rideshare company and they are also not protected by their personal auto insurance.

    The typical coverages included in a commercial auto policy include: liability, physical damage, medical payments, uninsured motorist, hired auto, non-owned coverage.

  2. General Liability:

    When you have a business, you’re liable for property damage, bodily injury and personal injuries relating to your business. You are protected if claims are filed for incidents that involve your business operations, products or services or if they involve advertising and/or personal injury. Even a person who trips on your handbag in your office can file a claim against your company, so it’s good to know you can rest easy and that your legal bills are covered in every instance. But imagine if your company makes frozen yogurt, which caused some customers to fall ill? With general liability, lawsuits and any type of restitution would be covered,

  3. Commercial Property:

    This type of coverage protects office equipment. It pays to repair or replace business property if it is damaged or destroyed. Coverage extends to the office space, fixtures, furniture, and supplies. Basically, it’s building coverage, business personal property coverage and business income coverage. It may even pay for temporary shelter if your office space becomes uninhabitable. What else is covered? Computers, exterior signs, fencing/landscaping and important documents.

  4. How Much Does Commercial Property Insurance Cost? The cost of insuring a commercial property depends on the value of the business assets, including the value of the building. Factors used to determine prices include: location, construction materials the building is made with and occupancy. Commercial property insurance includes fire and theft protection.

  5. Worker’s Compensation:

    Worker’s compensation insurance pays for an employee’s medical expenses and rehabilitation costs. It also pays a part of the wages lost due to injury. Some policies offer a death benefit for employees killed on the job. Workers’ compensation is required by most business owners. Often sole proprietors, freelancers and contractors do not elect to have workers’ comp, but it would benefit them too, with a partial salary if they became unable to work. The way workers compensation works is this: If you are injured or fall ill due to a work related activity, you must first visit an approved health care professional (not just any doctor of your own choosing). You then start a claim process with the help of the employer, who should provide the right forms and important contact information. If the business’s insurance provider approves the claim, you’ll begin receiving benefits, which include medical expenses coverage and ⅔ of lost wages while they are unable to work. An injured employee

  6. Business Owners Property (BOP):

    All property and liability risks are protected with a BOP policy. This type of policy offers all the basic coverages a small or mid-size business needs in one product. It’s also more cost-effective than buying each component individually. A typical BOB policy includes property insurance, business interruption insurance and general liability insurance. Business interruption insurance is possibly the most important part of this coverage because it covers up to a year’s worth of lost revenue due to an insured loss. For example, let’s say you own a gym and a storm destroys the building, making it impossible to conduct business as usual. While you either a) find a new location or b) fix the damage, you will receive payments. Other coverages under BOP include: vehicle coverage and flood insurance.


It’s important to speak to a reliable agent about the particulars of your business, including not only its strengths but its weaknesses, which may leave you exposed to risk. At SmartFinancial, we can connect with you with an agent who has the knowledge and experience necessary to help you get only the coverage you need. To start a quote process for multiple rate offers, visit here.

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