Protecting your business venture against any contingency is a wise move. Only those who are prepared to handle all eventualities will succeed in the world of cut-throat competition. Commercial Insurance or business insurance, aims to offer this protection through various products.
Why Do You Need Commercial Lines Insurance?
Yes, you need insurance to safeguard your business assets. But is that the only reason to go and get commercial insurance? Well, if that is what you think then it’s time to read this article and get up to date on some very critical facts.
- Protection From Cost Of Litigation – nowadays, lawsuits are a very common occurrence. Some are well warranted and others are just filed to gather attention. Either way, many times cases run for years and hence the cost of litigation runs very high. At times a business might even have to close its doors even before the verdict is announced. Liability insurance allows you to take such things into consideration. The cost of defense in such cases is borne by the insurer. And many times they even get a lawyer to agree to defend your case.
- Protection From Theft – it is difficult to protect any business from theft and burglary of goods from the premises or warehouse, completely. Similarly, when the goods are in transportation they can be stolen. This means a huge loss for any business. Insurance will save you from such damages as well.
- Protection From Natural Disasters – natural disasters do not announce themselves. A reasonable prediction can be made for them but that hardly gives anybody time to pack up and move the business. Commercial insurance provides protection against such natural calamities.
Types Of Commercial Insurance
There are many types of commercial or business insurance. But those that are really a must have are discussed below.
- Property Insurance – property is probably the most expensive asset of a businessman. So, the very first insurance that you need to have is property insurance. It will protect your office space from burglary, fire, natural calamity etc. A good property insurance policy will also safeguard your ongoing construction projects against any damages. Much can happen to a building before it reaches completion. Any harm at such a stage results in a massive financial burden which can easily be handled with proper insurance. Similarly, even warehouses and factories need to be insured as these are equally important for any business.
- Marine Insurance – here marine does not relate to just water based modes of transportation. In the olden days, trade routes mostly went through seas and these waters were a formidable foe. So, traders took insurance to protect their goods in transportation. And hence, the name marine insurance. Today, this insurance covers all goods and cargo that is transported by air, rail, road or sea. Marine insurance covers the risk of damage to goods and the transporting vehicle as well. A good marine policy will cover all goods that move across many locations before reaching their final intended destination.
- Liability Insurance – for ease of understanding, I am dividing liability insurance into three heads.
- Professional Liability – as the name itself suggests this insurance provides protection to professionals like doctors, accountants, brokers etc. The insurance coverage is provided against liability incurred due to errors and omissions in executing their professional service. For this very reason, it is also known as Professional Indemnity Insurance (PII) and Errors & Omissions (E&O). This specific insurance provides coverage for defence costs even when the case is baseless.
- General Liability – all businesses need to protect themselves against third-party claims which can arise due to property damage or bodily injury. Such claims usually arise from customer side due to property owner’s negligence in regards to premises, products, operations etc. General liability insurance covers both the cost of litigation and the concluding court awards.
- Specific Liability – the way a business is conducted today and how it was carried out in the past greatly differs. For example, today business is mostly internet based and hence there is always a cybersecurity risk. In the same way, commercial crime has become a common occurrence with huge consequences and so has carrier’s legal liability. All these risks are covered by specific liability insurance.
- Workers Compensation – this is a type of insurance that provides salary replacement and medical benefits to those employees who get injured in the line of duty. This compensation is given to the injured employee in lieu of him or her giving up their right to sue the employer for their wrongful act of negligence. As a business owner, this insurance can save you a lot of grievances.
- Auto Insurance – most businesses these days either own or operate cars, trucks, delivery vans etc. Auto insurance provides financial protection against physical damage and bodily injury, or both caused due to vehicle failure or collision. It also protects the business owner from the liability that could arise due to such an occurrence. Auto insurance also provides coverage against theft of such a vehicle.
- Business Interruption Insurance – there are many scenarios when the smooth operations of a business get interrupted. A business can’t be run when there is property damage, a strike, a natural calamity etc. Such interruptions cause heavy losses. To prevent your business from keeling over and capsizing it is necessary to protect it from such unwarranted stops. Business interruption insurance covers the loss of income to a business due to any disaster.
Commercial insurance will help you cover your business against the above-mentioned risks and provide the right financial security. This will give you a better chance to have a successful run with your venture. Commercial insurance is a must so choose wisely.