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Is Commercial Insurance Really Necessary?
Category: Finance Investing Insurance
When most people talk about commercial insurance they are normally speaking about commercial liability insurance, commercial property insurance, or workers comp commercial.
A brief description of what each type of commercial insurance covers:
- Commercial Liability Insurance: You should consider this type of insurance your most effective way of defending yourself and your business from any claims. The most important areas that this insurance can be used to protect yourself is: Bodily Injury, Property Damage, Personal Injury, Advertising Injury. One other important area that liability insurance will help you out with is when it comes time to settle a claim. This insurance will pay for the money that would normally come out of your pocket for legal fees arising from legal defense, settlement, and even claims deemed to be not true. There is no business that should be without commercial liability insurance. There are certain commercial businesses that will need a policy tailored to that type of specific company.
- Commercial Property Insurance: When a company suffers a loss due to damages that result in real or personal property being damaged, property insurance will cover it. Commercial property insurance will cover an event such as smoke damage to your place of business. It is sometimes wise for a business to add on additional coverage for their property. Examples of these additional policies would be:
- Boiler and Machinery Insurance: This type of insurance is better known as mechanical breakdown insurance which will protect against equipment breakdown. The coverage is important because if a boiler, machine, or piece of equipment were to stop working and bring your business to a halt, you would be covered. You would want your commercial liability insurance to pay you for any damage or interruption to your business.
- There is always something that happens that is unexpected. A fire that results in some high tech equipment being ruined is something that this coverage will pay out for.
- Debris Removal Insurance: There is quite a mess left over if a building or major piece of equipment was on fire, involved in a flood, or a windstorm. The cost of the clean up would be covered with this category of insurance. We have all watched the evening news and have seen footage of a commercial building on fire. Sometimes the entire structure is engulfed and burns right down to the ground. When a contractor comes in and starts estimating and quoting what a new structure is going to cost you, the old charred remains will have to be removed. Your original commercial insurance quote will not cover the clean up after a fire. It will however cover the cost associated in constructing the new building.
- Construction Insurance: This type of coverage is also known as builder’s risk insurance. It will cover the new construction as the structure is being built. Construction Insurance really is a good name for this type of coverage. Let’s take a look at a real life situation that could happen during the building of a commercial structure. High winds blow down through the canyon and wipe out you yet to be completed office complex. Will that be covered under a builder’s risk policy? You bet it would, and that is why it is important that you have it.
- Glass Insurance: This is self explanatory. If there is any broken glass for any reason in your establishment then you will be covered.
- Inland Marine Insurance: This type of policy is structured to insure property while it is being moved or relocated. Although Inland Marine Insurance is a rather unique title, make no mistake that this type of insurance is very worthwhile having. If you own a business or travel a lot on business with high value items this insurance becomes essential. If you contact a commercial insurance company and speak with a commercial insurance agent you will be able to discuss options and construct a policy that will suit your needs. It is more than likely that Inland Marine Insurance will be a rider on your main commercial insurance policy.
- Business Interruption Insurance: This type of coverage will protect you against loss of earnings if it is a result of an interruption in your business that is covered under your policy. A typical scenario would be if there is heavy smoke damage to your business and it forces you to close down for a few weeks or months, Interruption Insurance will cover your expenses. Most policies will pay you for paychecks, taxes, mortgage or rental payments, and believe it or not the profit you would have earned during the weeks or months that you were shut down. This type of policy is also known as Loss Of Income Coverage.
- Ordinance or Law Insurance: If you suffer a major loss to your building, you might be surprised to find out that repairing the building and making sure it conforms to present day code is going to cost you a fortune. Lets look at it like this: You have a 2 story office structure that was built back in the 1950′s. The property is located one block away from a river. A bad storm hits the area and the river overflows. The resulting flood waters renders the bottom floor of the building useless. It is determined that the bottom floor has to be completely replaced which represents 50% of the building. Now here is where you start pulling your hair out. There is a local, city or county, ordinance that states that if half the building has to be rebuilt then the whole building needs to be torn down and built new and up to code. Your property insurance policy will not pay to do this. There is something called a “Ordinance of Law Exclusion” attached to most policies. It is imperative that you have Ordinance or Law insurance so that you don’t get financially devastated if you find yourself in this type of circumstance. Don’t make the mistake that just having a commercial insurance policy is going to protect you. You need to understand how commercial insurance claims work.
- Malpractice Insurance: I know what your thinking, but malpractice insurance isn’t just for doctors. It is for any professional that has a liability that can be exposed. This coverage will pay for claims filed against a professional for injuries that resulted because of conduct drifted lower than the profession’s stated standards. A malpractice insurance policy will for legal expenses and any monetary damages awarded to the third party.
A whole host of professions are eligible for malpractice insurance: medical doctors, dentists, accountants, real estate professionals, architects, etc… Consult with a commercial insurance agency for more detailed information. - Commercial Auto Insurance: If you have the type of company that has cars, vans, trucks, or any other type of vehicle then you are a candidate that needs to have commercial vehicle insurance.
Massive monetary awards are given by juries to people who are hurt by a motor vehicle that is owned or operated by a company. The company is often seen as an entity with deep pockets. Just about any commercial insurance agency can obtain commercial car insurance for you. Do not use the same agent that you use for you sport car insurance. You need someone who specializes in the commercial field. This is absolute must if you want protection that could literally save you and your company from financial ruin. - Workers Compensation Insurance: In most states you are required to have this insurance by law. It covers a business for injuries that occur on the job to employees. The good news is that it usually true that having workers comp insurance will prevent employees’ from filing negligence lawsuits against you for work injuries.
No business should ever go a single day without the proper type of commercial insurance coverage.