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Commercial Insurance Guides & Advice

The SmartFinancial blog is filled with advice and assistance on all your insurance questions.

professional liability insurance coverage for professionals
Commercial Insurance

What Is Professional Liability Insurance?

Professional liability insurance protects professionals, like lawyers and accountants, from financial losses due to claims of negligence or failure to perform their professional duties. Learn how it works and how much it costs.

employment practices liability insurance at work
Commercial Insurance

What Is Employment Practices Liability Insurance (EPLI)?

Employment practices liability insurance (EPLI) protects your business against claims of wrongful termination, discrimination and harassment made by current or former employees. Learn what EPLI costs and whether it’s right for you.

business fleet commercial car insurance
Commercial Insurance

What Is Commercial Auto Insurance?

Learn about commercial auto insurance, including coverage options, how it works, and what is typically excluded from coverage. Find the right policy for your business today.

fiduciary liability in business insurance
Commercial Insurance

What Is Fiduciary Liability Insurance?

Fiduciary liability insurance protects against financial losses that result from a fiduciary's failure to fulfill their legal and ethical obligations.

hold harmless agreement
Commercial Insurance

What Is a Hold Harmless Agreement & How Does It Impact Your Business Insurance?

A hold harmless agreement is a legal binding contract that transfers some liability exposure from the provider to the signing party. Learn how it works and what types of businesses use it.

directors and officers (D&O) liability insurance
Commercial Insurance

What Is D&O Insurance and Who Needs It?

Directors and officers (D&O) liability insurance protects corporate leaders from financial losses and legal fees that may result from claims made against them in the course of their duties. Learn how it works and if it’s right for your business.

What Is Commercial Insurance?

Commercial insurance, also called business insurance, protects a business from various types of losses and mishaps that might otherwise cause a disastrous financial blow to a company. Commercial insurance covers business owners as well as employees. Usually, a commercial insurance policy is written to cover a business against accidents, lawsuits and property damage. Each type of business has unique areas of exposure so it’s important to speak with a knowledgeable agent who can ensure that your business is covered for any kind of catastrophe.

Most business insurance policies include basic coverages such as property damage, general liability, crime, cybercrime, equipment breakdown, business interruption, commercial auto and workers compensation, which is required in most states. Surety bonds are also sometimes required for contractors, to ensure that a construction contract is honored and that the contractor follows all government rules and regulations. Surety bonds are also used to protect against theft.

Often, several coverages are combined in a business owners policy (BOP). Usually, the coverage includes, business property insurance, general liability insurance and business Interruption Insurance. However, not all businesses qualify for a business owner’s policy. Most insurers only cover businesses with a BOP if they operate in a brick-and-mortar building. Some businesses that are eligible for BOPs include retail stores, apartment buildings, small restaurants and office-based businesses.

If you have a home business, you probably don’t qualify for a BOP but you should make sure to buy home business coverage or general liability insurance. Worker’s compensation is required in most states, if you have employees. For more about coverages, see below.

Is Commercial Insurance Required?

If you have employees, it’s required that you carry workers compensation in most states but there are no federal regulations for workers compensation. Most types of business insurance are optional . It’s important, however, to carry a property and casualty insurance policy along with a workers compensation policy.

What is Commercial Insurance Coverage

General Liability Insurance (Professional Liability Insurance)

This coverage covers costs related to claims against your business if errors were made in providing your services. Coverage would apply to defend a business against lawsuits.

Business Interruption Insurance (Business Income Insurance)

This coverage replaces lost income if you are forced to close temporarily due to a covered loss like theft or property damage from a covered peril. It may also help pay expenses while your property is being replaced or repaired.

Business Property Insurance

This coverage protects the building and personal property associated with the business. The following are usually covered: equipment, furniture and inventory.

Workers’ Compensation Insurance

This coverage is often required if you have employees. It covers employees while they are unable to work after suffering a work-related injury or illness. If an employee sues the business, workers’ comp can help cover the cost of legal fees.

Commercial Auto Insurance

This type of coverage protects your business from the costs of a work-related auto accident. If your worker uses a car for business purposes, like meeting clients, or if you own a fleet of vehicles used for work purposes, you’ll need commercial auto insurance.

Data Breach Insurance (Cyber Insurance)

This coverage protects your business against cyber threats or attacks. If you are attacked, your insurer will cover the cost to find the source of the breach and prevent further damage. Reputation management and prevention training are offered by most insurers.

Commercial Flood Insurance

This coverage protects against the costs of covered flood damage. This coverage is separate from business property insurance. Flood-water damage will not be covered by business property insurance. Commercial flood insurance will cover damage and losses.

Business Owner Policy (BOP)

A package of coverages that includes basic insurance coverages and offers a savings over buying each coverage separately. A BOP protects against property damage, named perils, business interruption and general liability.

Commercial Umbrella Insurance

This coverage provides additional coverage when limits on other liability policies reach limits. Many businesses protect their businesses from lawsuits and claims by purchasing commercial umbrella insurance, which ensures adequate coverage.

Employment Practices Liability (EPL)

EPL coverage protects a business against lawsuits filed by employees. Defending a lawsuit costs money, and the more employees you have, the higher a chance you’ll need to defend yourself against charges of discrimination, wrongful termination or harassment.

Surety & Fidelity Bonds

Surety bonds are contracts between three parties to ensure the completion of a project with a guaranteed payment if the requirement is not met. Fidelity bonds protect businesses against employee theft and fraud.

Home-based Business Insurance

Many businesses operate out of the business owner’s home. If you have supplies or any business-related property in your home or if you have clients who visit, you should consider buying this coverage.

How Rates Are Determined for Commercial Insurance

Various factors are used to determine a commercial insurance rate. Rates greatly depend on the type of business that is being insured. Other important factors include:

  • Location
  • Number of employees
  • Annual revenue
  • Whether you own or rent vehicles
  • Whether you own, lease or rent the building you operate from.
  • Number of years you’ve been in business

How to Choose Commercial Insurance

It’s important to do a little research to see what types of risks your business is exposed to. Make a list of the types of claims filed according to your industry. Shop around to find the right business insurance products at the right price. Often, small businesses bundle coverages with a BOP, a type of policy which is created to save you money while covering the essentials. However, every business is different so it’s important to speak with a trustworthy insurance agent who specializes in commercial insurance. Together, you can customize the right plan for your business.

How Much Does Commercial Insurance Cost?

Many factors determine your commercial insurance costs. You may be best off buying several insurance products, depending on your exposure to risk. It’s highly recommended that you buy general liability insurance at the very least, as well as the required workers compensation package, if you have employees. The average annual cost of general liability insurance ranges from about $450 to $2,800 a year. Your business size and type of industry are usually very heavily weighed in determining your rate.

How to Compare Commercial Insurance Quote

All you have to do is take 3 minutes to complete a brief form with SmartFinancial and we can right-match you with a qualified commercial insurance agent in your area, who specializes in the type of business you run.

What Is Commercial Auto Insurance?

Commercial auto insurance is for business owners who use their car(s) for business purposes. Whether your business has one business vehicle or a commercial fleet , you’ll want the protection only a commercial auto insurance can provide.

Delivery vans, semi-trucks, food trucks and dump trucks require commercial auto insurance. Even you need a commercial insurance policy if you use your car for work-related purposes. A personal auto insurance won’t cover a vehicle when it’s being used for business. Even if you have a home-based business, if you’re in an accident running a work errand, your insurer will not cover you unless you have a commercial auto insurance policy.

The liability coverage on your commercial auto insurance works in the same way that your liability coverage works on your personal auto insurance policy. Liability coverage with a commercial auto policy protects you from damage you may cause in your vehicle. Collision and comprehensive coverage will cover your vehicle no matter who is at fault or if your car is stolen/vandalized.

Only commercial auto insurance offers non-owned vehicle coverage, which extends coverage to employees who use their vehicles for business reasons. A standard commute to and from work does not require commercial insurance but if the nature of the work is to meet with clients at various locations or to drive a vehicle filled with tools and supplies, you need a business auto policy.

What’s the Difference Between Commercial and Personal Auto Insurance?

Not only will personal auto insurance not cover you if you use it to perform work-related tasks, your personal auto insurance may not have high enough limits. Commercial auto policies have higher limits in nearly all cases.

Commercial auto insurance is tax-deductible while personal insurance is only partially tax deductible if you use it for business. Also, if you plan to allow various people to share a vehicle for work purposes, you can buy blanket coverage for all employees with a commercial insurance policy. Only commercial auto insurance provides coverage for equipment like trailers and forklifts.

If your vehicle is owned by your company, it needs a commercial auto policy. In some cases, if you own the vehicle as an individual but use it for certain types of activity you may need a commercial policy as well. For instance, if you transport people and goods/equipment for work, you’ll need a commercial auto policy. If you’re not sure which you need, speak with a knowledgeable, licensed agent. Avoid saving money in the short-term only to pay more in the long-term.

Commercial Auto Insurance Coverages

  • Liability coverage : This coverage includes bodily injury liability (BIL) and property damage liability (PDL) under one combined limit. BIL covers you when a third party is injured by you or any employee of the company. PDL covers you if you or any employee causes property damage while using a covered vehicle or otherwise.
  • Medical payment coverage/Personal injury coverage : This coverage takes care of medical expenses for the driver and passengers of your vehicle, regardless of who is at fault, if they’re in an accident.
  • Collision coverage : Like collision coverage for a personal auto insurance policy, this coverage pays for damages to a vehicle from an accident, regardless of who’s at fault.
  • Comprehensive coverage : Like comprehensive coverage for a personal auto insurance policy, this coverage pays for damages to the covered vehicle(s) in the event of theft, vandalism, extreme weather, falling object or other incident that is not a collision.
  • Uninsured/underinsured driver : This coverage pays for damage(s) caused by an uninsured or underinsured motorist.
  • Other coverages also available for purchase with a commercial auto insurance policy: trailer interchange coverage, rental reimbursement with downtime, hired vehicle coverage and non-owned vehicle coverage.

Who Needs Commercial Auto Insurance?

If you deliver pizza, furniture or inventory of any kind using your own vehicle and if the company you work for does not provide coverage on your behalf, you need commercial auto insurance.

If you’re in an accident while driving for work-related reasons, your personal auto insurance will not cover you. Without the right coverage you may be held personally responsible for an auto accident during work hours. Different insurers offer different coverages based on your line of profession. For instance, Progressive offers Pizza Delivery Insurance!

Why Do I Need Rideshare Insurance?

There’s a coverage gap when you are neither covered by your personal auto insurance policy and the one offered by the rideshare companies. The driving phases in a rideshare are broken down into three sections: Period One, Two and Three. In Period One, your app is on, but you don’t have a customer. Period Two you’re en route to pick up a customer. Period Three is when the customer is in the car.

You are not covered by the rideshare company during Period One. As far as your personal auto insurer is concerned, you are working during Period One so you are not covered by either policy. This is why it’s important to buy a rideshare policy, which is different from a commercial auto insurance policy. It is usually an add-on to a personal policy and rarely costs more than $10 a month.

Do Uber/Lyft Drivers Need Commercial Auto Insurance?

An important note for rideshare drivers: If you drive for Uber, Lyft, Sidecar or any other such company, you’ll need rideshare coverage, not commercial auto insurance. However, if you are a rideshare driver in New York City, you must have commercial auto insurance.

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