7 Types of Commercial Insurance Coverages You Should Carry

Data from the U.S. Bureau of Labor Statistics (BLS) indicates that only 25% of businesses in the U.S. make it beyond 15 years of operation. Most of the rest collapse within five years due to factors such as stiff competition, natural disasters, lack of finances, and a lack of market need, as reported by Statista. However, insured businesses are in a better position to survive tough financial times that may result from business interruption. This is because business insurance policies protect your business from named perils and events. For this reason, you should consider insuring your business in all aspects. Here’s a detailed look at seven types of commercial insurance coverages you need to protect your business.

Workers’ Compensation Insurance

Every hour, more than 500 employees in the U.S. suffer injuries at the workplace due to slips and falls, overexertion, and contact with objects, according to the National Safety Council (NSC). The highest number of injuries occur in the construction and transportation industries, mostly due to the risky nature of operations and the machinery involved. Whenever an employee gets a work-related injury, workers’ compensation insurance pays the lost wages and the resulting medical costs. This means that purchasing workers’ compensation insurance for your employees saves you from paying for lost wages and healthcare costs out of pocket in case of injuries at the workplace. Take note that worker’s compensation insurance is optional for private employers in Texas.

Business Interruption Insurance

Fire and explosions are the main causes of business interruption in the U.S., and they cause massive property damage. In fact, data from the Federal Emergency Management Agency (FEMA) shows that at least 40% of U.S. businesses fail to reopen after such disasters due to the huge financial harm. Since disasters are inevitable, you should consider purchasing a business interruption insurance policy as part of your business continuity plan. While it may not fully restore your business after a catastrophe, a business interruption insurance policy will help you bounce back more easily than if you bore the whole financial burden alone.

Cyber Insurance

Apart from natural calamities such as floods, cyberattacks are another cause of losses in a business. For instance, in 2019 alone, American individuals and businesses lost about $3.6 billion to cyberattacks, as reported by the Federal Bureau of Investigation (FBI). This shows just how much your business can lose due to cyberattacks in the form of phishing, malware attacks, and password attacks. To protect your business’s digital property, you can train your employees concerning cybersecurity, update your software regularly, install a security system, and use stronger passwords. While these measures will enhance your cybersecurity, a cyber insurance policy will help you stay operational or restore your business in the event of a cyberattack.

Business Property Insurance

Every year, many businesses lose their property to perils such as natural calamities, theft, fire, and vandalism, leading to huge financial losses. The losses can be even bigger if the destroyed property is of high value, and paying for repairs or replacements from your savings can potentially send you into financial turmoil. The good news is that business property insurance coverage protects your commercial property from damage and pays for repairs when needed. Therefore, ensure you buy the right property insurance depending on the type and number of equipment you own for full insurance. Take note that business property insurance does not cover fleet vehicles, watercraft, land, and money.

Commercial Auto Insurance

Auto insurance is mandatory for all car owners in every state except Virginia and New Hampshire. This means that you also need to purchase commercial auto insurance for your fleet vehicles if your business is located outside these two states. The commercial auto insurance policy basically provides coverage for damage on your business motor vehicles as well as third-party injuries and property damage caused by your vehicles. Nevertheless, this policy does not cover liability claims resulting from pollution or intentional injuries.

General Liability Insurance

On average, about 53% of businesses face a lawsuit at least once in their lifetime, says the Small Business Administration (SBA). In other words, there is over a 50/50 chance that your business will face a lawsuit at some point due to issues such as third-party injuries, contract breaches, and discrimination against customers. For instance, a passerby may sue you if a tree on your business premises falls on him and breaks his legs. Rather than serving a jail term, the court may give an order for your business property to be auctioned or claimed by the victim. That’s where a general liability insurance policy comes in handy. It shields your business property from third-party claims and auctions as well as pays for any legal costs involved in the lawsuit.

Commercial Umbrella Insurance

In some cases, third-party liability claims can be bigger than what the general liability insurance covers. Luckily, the commercial umbrella insurance policy provides excess coverage above your basic liability insurance. For instance, your fleet vehicle can knock down and seriously injure a cyclist, who, in turn, sues you for compensation of $1 million. If your general liability insurance only covers $500,000, then the commercial umbrella insurance will kick in to pay the remaining amount.

Use these seven commercial insurance coverages to protect your business. To safeguard your business from risks, make sure that you have the right commercial insurance from the start. For a policy to suit your business at the right price, contact the team at Humble & Davenport Insurance today. We look forward to assisting you.

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