You’ve invested a lot in your business, which has many pressing needs, so it’s understandable that insurance coverage may not be on the top of your list. However, as a business owner, a commercial insurance policy is not a luxury: It’s a necessity that can protect your business and financial investment.
While companies are required to have certain forms of insurance like workers’ compensation insurance. It’s up to the owner to decide what other commercial policies to take out that will safeguard their business from loss, property damage, bodily injury claims or lawsuits.
There are many different types of commercial insurance available to business owners. Commercial insurance agents, like those at Bank Midwest Insurance, have the experience to evaluate risk levels for all kinds of businesses and recommend which policies best fit their needs.
To help you determine what insurance coverage your business needs, let’s look at standardized business owner’s policy (known as a BOP) in comparison to a commercial package tailored to your business.
Business Owner’s Policy (BOP)
Essentially, a BOP bundles together a number of coverages under one convenient policy. For the most part, BOPs are designed for small and medium-sized businesses and are usually more cost-effective way to insure your business if your business fits into a BOP.
There are three main components to a BOP:
- Commercial property insurance for your building, offices, equipment and inventory.
- General liability insurance for costs that arise from claims related to bodily or personal injury.
- Business interruption insurance that covers lost business income when you have to close due to a fire, disaster or another covered event.
For many businesses, a BOP is sufficient to meet their coverage needs. BOPs are typically constructed to cover similar types and levels of risks that most small businesses are exposed to.
Determining whether a BOP will be best for you requires careful evaluation of your company. If you’re considering a BOP, start by thinking about what types of property and liability risks your business may encounter.
Tailor Your Business Insurance Package
Every business is unique, and so too are its insurance needs. Depending on your industry, a BOP may not offer enough protection or the right types of insurance coverage.
There are common scenarios encountered by business owners of all types of companies, some of whom face risks specific to their industry or geography. For these owners, working closely with a Bank Midwest Insurance Agent is beneficial in understanding exactly what commercial insurance policy needs exist.
Experienced insurance agents will spend time understanding how your business operates and recommend the types of coverage that best protect your risks.
General liability insurance
Every business should have general liability. Commercial liability, also called commercial general liability (CGL), is a comprehensive policy designed to cover costs and financial losses that are incurred as a result of bodily injury, personal injury or property damage that happens on your premises or is caused by your products, services or employees.
General liability insurance covers some of the most common, and most expensive, claims. Some instances in which commercial liability is useful are if:
- A customer trips on boxes left unattended on the floor and injures themselves.
- Your advertising infringes on copyrights or uses images without license.
- An employee or contractor causes property damage like a small fire.
Commercial property insurance
Commercial property insurance is for businesses and other organizations that insures against damage to their buildings and contents due to a covered cause of loss, such as a fire. The policy may also cover loss of income or increase in expenses that results from the property damage.
Property can be categorized as either tangible or intangible.
- Tangible property can be further subdivided into real property and personal property.
- Intangible property has no physical form, such as a patent or copyright.
Commercial auto insurance
If your company uses a vehicle for business, you’ll need to purchase a separate commercial auto insurance. You’ll need a commercial policy because your personal auto insurance will not cover accidents that happen as a result of business operations – including if you’re using a personal vehicle for business purposes.
Workers’ compensation insurance
Workers’ compensation insurance covers medical fees incurred due to workplace-related injuries, illnesses and deaths. Companies that hire employees are typically legally required to have it. Any injury that’s directly related to a person’s job duties is covered by workers’ comp.
Of course, workers’ compensation insurance is not the only action that organizations should take to protect the workforce. Businesses should aim to prevent these incidents from happening by creating a safe working environment. The insurance company you work with should have a variety of resources available to help you make more educated decisions on workplace safety and insurance coverage.
Employee practice liability insurance
Employee practice liability insurance (EPLI) protects your business against lawsuits brought by employees or job candidates. Types of claims can include:
- Sexual harassment
- Failure to hire or promote
Like with worker safety, most companies strive to avoid these adverse types of situations through corporate policies. However, EPLI will help cover costs of legal proceeding if needed.
Cyber liability insurance coverage (CLIC) reimburses business owners for costs relating to digital disruption, including data breaches, identity theft, lost or corrupted data, or other cyber incidents like extortion.
While an emerging type of commercial insurance, cyber insurance is becoming increasingly common and important to modern business operations. Companies of all sizes and industries depend on digital processes and tools on an everyday basis, and cyber insurance can protect those key business assets.
Common types of claims include those for compromised business emails and ransomware attacks. It’s wise to invest in this type of insurance if you process or store any type of sensitive data.
Directors and officers liability coverage
This form of coverage protects the individuals who serve on your board of directors or as officers in your organization in the event that a claim is made against them. Consider this type of insurance if you have decision-making board of directors or officers.
Inland marine insurance
Inland marine insurance protects business equipment when it’s being transported, or when they’re being stored or held at a third-party location. It also covers property that’s used for transportation or communication.
Commercial general liability insurance is comprehensive, but it does not cover everything. That’s where an umbrella policy comes in — sometimes referred to as excess liability. Whereas CGL provides a base of coverage, an umbrella policy can extend the bounds of that protection.
An umbrella policy is useful because it covers losses beyond your limits. Your commercial liability policy will protect your business from losses, but up to a certain limit. When these limits are exhausted, you could be on the hook. For example, a customer’s medical bills following a fall. An umbrella policy gives you an added layer of coverage by extending those limits for commercial, auto or employer liability.
What’s right for you?
There is no one-size-fits-all solution when it comes to getting the right type of business insurance. To understand your policy needs, you must first start with assessing the risks your business is vulnerable to.
From there, it may help to talk to an experienced agent that can recommend next steps and help you find the perfect policy.
Contact Bank Midwest Insurance today to speak to an insurance professional about commercial policies and how we can help.