Commercial Insurance

general liability insurance

Also known as business liability insurance, general liability insurance protects you and your business from “general” claims involving bodily injuries and property damage. Almost every business has a need for general liability insurance.

General liability insurance definition

General liability insurance can help cover medical expenses and attorney fees resulting from bodily injuries and property damage for which your company may be legally responsible.

What does general liability insurance cover?

General liability insurance policies typically cover you and your company for claims involving bodily injuries and property damage resulting from your products, services or operations. It may also cover you if you are held liable for damages to your landlord’s property.

General liability insurance doesn’t cover employee injuries, auto accidents, punitive damages (in most states), workmanship, intentional acts or professional mistakes.

Business Owners Policies

Business Owners Policy (BOP) is enhanced insurance that combines general liability insurance and property insurance.

Many small business owners mistakenly believe that if they have general liability insurance, their own losses are covered as well as the losses of their customers. But a general liability policy does not protect you when it comes to your OWN property. If you want to protect your own property consider buying Business Owners Policy (BOP).

You should consider a business owners policy if you:

• Need general liability insurance coverage.
• Have business equipment such as computers, printers and furniture.
• Own the building at which you work and need to insure the property.
• Own and work with large amounts of data on a regular basis.
• Have employees who could act dishonestly or steal clients' property.

Customize your Business Owner Policy (BOP)

Depending upon the specific needs of your business, you can customize your BOP policy by choosing options such as:

• Office insurance for fire and business interruption
• Electronic data loss insurance
• Hired or non-owned vehicle liability insurance
• Commercial crime insurance to cover the dishonesty of your employees
• Terrorism

What Business Owners Policy (BOP) does NOT Cover

To get professional services you can choose to buy a professional liability insurance policy in addition to Business Owners Policy.

• Certain claims, including those arising from professional services you perform.
• Client damages if you provide inaccurate or incomplete advice to a client.

Workers' Compensation

Workers' compensation is a publicly-sponsored system that pays monetary benefits to workers who become injured or disabled in the course of their employment. Workers' compensation is a type of insurance that offers employees compensation for injuries or disabilities sustained as a result of their employment.

BREAKING DOWN 'Workers' Compensation'

By agreeing to receive workers' compensation, workers also agree to give up their right to sue their employer for negligence. This "compensation bargain" is intended to protect both workers and employers. Workers give up further recourse in exchange for guaranteed compensation, while employers consent to a certain amount of liability while avoiding potentially greater damage of a large-scale negligence lawsuit. All parties (including taxpayers) benefit from avoiding the legal fees needed to process a trial.

Workers' Comp Coverage

Most compensation plans offer coverage of medical fees related to injuries acquired as a direct result of employment. For example, a construction worker could claim compensation if scaffolding fell on their head, but not if they were in a traffic accident while driving to the job site. In other situations, workers can receive the equivalent of sick pay while they are on medical leave. If a worker dies as a result of their employment, workers' compensation also gives payments to their family members or other dependents.

While the "compensation bargain" excludes the possibility of a tort of negligence being issued by employees, this is not to say that compensation is a foregone conclusion. For one thing, it is not always clear whether or not an employer is actually liable for an injury to their worker. Furthermore, working injuries are chronically underreported in some industries.

Legally, there is no penalty for reporting a workplace injury to an employer, but this stipulation is impossible to regulate on an individual level, especially in industries like construction where a worker's livelihood depends to a degree on their physical abilities. Workers' compensation payments are also susceptible to insurance fraud: in some cases, workers will sustain an unrelated injury but report that it was sustained on the job.

Workers' compensation should not be confused with disability insurance or unemployment income; it only pays workers who are injured on the job, while disability insurance pays out regardless of when or where the insured is injured or disabled. Workers' compensation also does not cover unemployment. Unlike unemployment income or disability benefits, workers' compensation is always tax-free.

Commercial Property Insurance

What is 'Commercial Property Insurance'

Commercial property insurance is used to cover any type of commercial property. Commercial property insurance protects commercial property from such perils as fire, theft and natural disaster. This type of insurance is carried by a variety of businesses, including manufacturers, retailers, service-oriented businesses an d not-for-profit organizations.

BREAKING DOWN 'Commercial Property Insurance'

Commercial property insurance can be a major expense for businesses that use equipment worth millions or billions of dollars, such as railroads and manufacturers. This insurance essentially provides the same kind of protection as property insurance for consumers. However, businesses can usually deduct the cost of commercial property insurance premiums as expenses.

Factors Considered in a Commercial Property Insurance

• Location: Buildings in cities or towns with good fire protection typically cost less to insure than buildings outside a city or in areas with limited fire protection.
• Construction: Buildings made of potentially combustible materials will have higher premiums, while those made of fire-resistant materials could earn a discount. Additions to an existing structure might affect a fire rating, so it's a good idea to talk to an agent or insurance company before remodeling. Internal structural elements can also affect a fire rating. Using wood partitions, floors, and stairways in an otherwise fire-resistant building will likely nullify any rate reduction. Fire-resistant interior walls, floors, and doors can help maintain a good fire rating.
• Occupancy: A building's use also affects its fire rating. An office building will likely rate better than a restaurant or auto repair shop. In a building with multiple tenants, one hazardous occupant will negatively affect the fire rating of the entire building. If a business is in a building with a more hazardous tenant, premiums will be higher.
• Fire and theft protection: How far is the nearest fire hydrant and fire station? Does the business have a fire alarm and/or sprinkler system? How about a security system?

Property to Consider for Commercial Property Insurance

1. The building that houses your business, whether it's rented or owned
2. All office equipment, including computers, phone systems and furniture, whether they’re owned or leased
3. Accounting records and important company documents
4. Manufacturing or processing equipment
5. Inventory kept in stock
6. Fence and landscaping
7. Signs and satellite dishes

Commercial Earthquake Insurance

Earthquake insurance is expensive and in locations with high or severe exposure to loss by this peril, availability may be somewhat limited. This is true particularly in California and in states near the New Madrid Fault, which include parts of Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri, and Tennessee. In other areas of the country earthquake insurance is generally available but may not be considered necessary, which for some can be unfortunate. As pointed out in the accompanying sidebar, “More About Earthquakes,” in the past 100 years earthquakes have occurred in 39 states.

Earthquake damage is excluded in the standard homeowners and commercial property insurance policies of Insurance Services Office (ISO) and the American Association of Insurance Services (AAIS). The following excerpt from the earth movement exclusion (with the concurrent causation language lead-in) is found in the commercial property policy.

Wrap-Up Insurance

Wrap-up insurance is a liability policy that serves as all-encompassing insurance that protects all contractors and subcontractors working on large projects costing over $10 million. The two types of wrap-up insurance are owner-controlled and contractor-controlled. Owner-controlled insurance is set up by the owner of a project for the benefit of the builder or contractor to cover all listed contractors. The general contractor, meanwhile, may use a contractor-controlled insurance program to extend coverage to all the contractors and subcontractors signed up on the project.

BREAKING DOWN 'Wrap-Up Insurance '

The intent of a wrap-up insurance policy is to provide peace of mind that everyone involved in a project is insured properly. Wrap-up insurance is sweeping blanket coverage that protects the owner, contractors and subcontractors.

For example, consider an owner-controlled insurance program purchased by the owner on behalf of the builder or contractor. Counting add-ons, the insurance includes workers compensation, general liability, excess liability, pollution liability, professional liability, builder's risk and railroad protective liability. While the cost of wrap-up insurance can be expensive, the cost can be divided among general contractors and sub-contractors.

Basic Wrap Insurance Coverage

Wrap insurance covers a number of risks for you, your project and your workers. Policies can vary, but may include:

• General liability with a broad form endorsement: This covers all liabilities for a project, including bodily injury coverage against third-party injuries that occur on the premises or as a result of owner, contractor or subcontractor work-related activities. Also, it protects third-party property against damage caused by anyone on the policy.
• Builders risk: This type of policy covers the building under construction against damage from causes such as fire and severe weather.
• Umbrella liability: Umbrella insurance provides coverage beyond your general liability policy coverage limit. For example, a general liability policy may cover up to $1 million in damages while an umbrella liability policy would cover up to $10 million or more. If you had a $5 million dollar claim, the general policy would cover first $1 million and the umbrella policy would cover the remaining $4 million.
• Workers' compensation: This wrap policy provides workers' compensation insurance coverage to all enrolled contractors or subcontractors on the project.
• Commercial vehicle: This insurance covers cars, trucks, vans or specialty vehicles used on the construction project against property damage and liability claims.
• Property damage: This covers property damage of all the parties named on your policy. You can also add equipment floaters for specialized equipment and tools or inland marine insurance for equipment and tools transported to and from a job site.

Professional Liability Insurance

Professional liability insurance, more commonly known as errors and omissions (E&O insurance), is a special type of coverage that protects your company against claims that a professional service you provided caused your client to suffer financial harm due to mistakes on your part (errors) or because you failed to perform some service (omissions).

E&O insurance can cover the cost of defending your company in a civil lawsuit and certain damages awarded, even if the legal action turns out to be groundless. Professional liability insurance is required by law in some areas for certain kinds of professional practices, especially medical and legal, where it is more commonly called malpractice insurance. This type of protection is not part of your general liability insurance or homeowners insurance.

Coverage does not include criminal prosecution, and there is a wide range of potential liabilities under civil laws that may not be covered unless written explicitly into the professional liability insurance policy. Common claims that professional liability insurance covers are negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice. Some policies could also cover privacy violations.

Many types of businesses need professional liability insurance. If your company business works directly with customers while providing services, you should consider professional liability insurance.

Commercial Auto Insurance

Commercial vehicle insurance is needed to cover the cars, trucks, and vans used in conducting your business. Large fleets, as well as small businesses, should be properly covered by a commercial auto insurance policy.

Commercial vehicle insurance is a policy of physical damage and liability coverages for amounts, situations, and usage not covered by a personal auto policy. Knowing the difference between a personal auto insurance policy and a commercial auto policy (and when you need which) is important business—for your business. This type of business insurance covers a variety of vehicles—from automobiles used for business, including company cars, to a wide variety of commercial trucks. Box trucks, food trucks, work vans and service utility trucks are just a few examples of larger commercial vehicles which also require coverage, including coverage for employees operating the vehicle and possibly the equipment inside. You may have heard of this coverage referred to as commercial auto insurance, commercial car insurance, truck insurance, or fleet insurance.

Certain business usage and vehicle types may be excluded from personal policies. Why? Since personal auto policies were not meant for businesses, they are written and rated differently. More important to you—a business owner or manager—businesses often need the particular coverages found in a commercial auto insurance policy.

Determining whether your situation requires commercial auto coverage can still be confusing. Here's a little more information and examples of when you need commercial insurance.

Commercial Umbrella Insurance

Commercial Umbrella Insurance provides businesses with additional liability coverage to help protect them against the potentially ruinous costs of claims. Significant assets can be at risk when businesses are the target of lawsuits. If the cost of a claim exceeds the limits of a business’s underlying primary insurance policies, Commercial Umbrella Insurance extends liability coverage for an additional layer of insurance to further protect business assets. Without Commercial Umbrella Insurance, business owners could be obligated to pay out of pocket for legal fees, medical bills, and damage expenses that exceed the limits of their underlying primary business coverages.

Builder's Risk Insurance

Builder’s Risk Insurance, also known in some areas as Course of Construction, is a unique kind of property insurance. It's a form of insurance, which covers a building where the building or insured area is presently being constructed. It can cover just the structure, or also the materials on site waiting to be installed or transported to the job site and is an insurance that most owners will ask every contractor to carry.

The builder's risk insurance policy will pay for damages up to the coverage limit.The limit must accurately reflect the total completed value of the structure (all materials and labor costs, excluding land value). The construction budget is the best source for determining the appropriate limit of insurance. Builder’s Risk insurance policies can often be written in terms of three months, six months, or 12 months. If the project is not completed by the end of the initial policy term, it can often be extended, but usually only one time.