NYC Insurance Blog

Differences Between Commercial and Business Insurance

Successful business owners know and understand the importance of insuring their business. However, commercial and business insurance differences may confuse new business owners. The two terms are used interchangeably by insurers to refer to the same type of coverage. Insuring your business is highly recommended to avoid financial losses in the long run. Business owners should know the differences between commercial and business insurance policies, the events they cover, and the cost of each policy.

What is Commercial Insurance Policy?

Commercial insurance protects you, your business, and your employees from unexpected events that could cause financial loss. Unforeseen risks or events, for example, injuries or property damage, can interrupt your business, causing huge financial loss. However, with commercial insurance, you can have peace of mind knowing that you are protected.

Typically, sole proprietors are legally required to buy commercial insurance. However, since businesses differ, commercial insurance policies also differ. Business owners should research the type of policy to purchase depending on the type of protection they want and their budget. Although commercial and business insurance seems different, they are similar and serve the same purpose, protecting your business. Get all your Business Insurance needs through, NYC Business Group.

Must-Have Types of Commercial and Business Insurances

General Liability Insurance

Also known as a commercial general liability (CGL), it protects you and your business from claims involving bodily injuries and property damage resulting from your business operations, products, and services. Sometimes, CGL may cover a business owner if he is held liable for the landlord’s property damage. General liability helps you cover:

• Medical costs if someone is injured on your business premises
• Cost of a property damage claim against your business
• Court costs and settlement for all covered events
• Administrative costs to handle all covered events

However, general liability insurance does not cover:

• Bodily injury claims made by your employees
• Your business auto accidents
• Damage to your office or business property

Professional Liability Insurance

Professionals who are experts in a specific field, for example, lawyers, nurses, accountants, and physicians, require professional liability insurance. Professional Liability Insurance protects professionals from legal claims their clients initiate concerning professional or business practices like negligence, misrepresentation, and malpractice.

Professional liability insurance may have different terms depending on the insured profession. Medical malpractice insurers medical professions, while errors and omissions (E&O) insure real estate agents and brokers.

Commercial Property Insurance

Commercial property insurance protects business property from risks like theft, vandalism, fire, burst pipes, and storms. Normally, this policy is bundled with other forms of insurance, for example, commercial general liability insurance. To determine how much you should pay for commercial property insurance, the value of your business’ assets, including the building, is considered. The insurance company also considers other factors like location, occupancy, and construction. Remember that risks such as earthquakes and floods are not covered by commercial property insurance unless you include them in your policy.

Workers’ Compensation Insurance

Also known as workers comp, workers’ compensation insurance serves two main purposes:

• Ensures the injured employee gets medical care and compensation while recuperating
• Protects business owners/employers from lawsuits filed by employees injured at work

Workers comp benefits include partial wage replacement as the employee is recovering, occupational therapy, and reimbursement for healthcare services. Employees receive benefits regardless of who was at fault. If an employee succumbs due to injuries or an accident at work, workers comp provides death benefits to the employee’s dependents. Employers have the following options to purchase workers’ comp:

• State fund – to help employers save money, State Compensation Insurance Fund provides workers’ compensation insurance at reasonable prices.
• Self-insure – employers can buy workers’ comp from a reputable insurance company with the help of an insurance broker. If you go down this road, thorough research is required to get a reliable insurer who offers the best coverage.

Umbrella Insurance

Umbrella insurance provides additional coverage beyond your policy’s existing limit. It can cover extra costs incurred in property damage, injuries, lawsuits, and personal liability. Therefore, business umbrella insurance adds extra protection to other policies to guard against unforeseen events/risks. Get an Umbrella Quote in Minutes, by Callin Our Offices Today!

Although any business benefits from umbrella insurance coverage, if any of the following scenarios apply to your business, you should consider buying umbrella insurance:

• If you or your workers/employees work on other people’s property
• If you have a contractual agreement/obligation to purchase an umbrella insurance policy
• If you have a commercial property that’s open to the public
• If your business is at a higher risk of a lawsuit

Ideally, no insurance policy provides unlimited protection. Therefore, even umbrella insurance has several limitations. Umbrella insurance does not cover:

• Criminal activity – lawsuits or fines originating from criminal activity are not covered by umbrella insurance.
• Error and omissions (E&O) – professionals who purchase E&O insurance should have extra money to cover additional claims if they arise.
• Property insurance claims – business umbrella insurance does not cover damages to a property owned by the business. Therefore, you will rely on property insurance for repairs or replacement if your business property is damaged.
• Claims beyond umbrella insurance limits – if the claim exceeds the policy limit, you will settle the difference.
• Failure to adhere to set guidelines and policies – you need to follow the required guidelines to get additional coverage. For example, if you do not have commercial general liability coverage, you cannot rely on a business umbrella policy solely. Umbrella coverage provides additional coverage when the existing insurance policy hits the limit.

Final Thoughts

Understanding the different types of commercial and business insurance policies is vital to saving time and money when protecting your business. Always seek help from an insurance agent to understand the different types of insurance policies you should purchase, the total amount of money you will spend, and how the policies will protect and benefit your business. An experienced insurance agent can help you save time, manage your insurance cost and find a custom business/commercial insurance policy that will meet your budget and business needs. Choosing the right insurance policy for your business can be a daunting task. However, if you take your time to research and seek professional help, you will make the right choice. Call NYC Business Group Today! We will Guide you through all your insurance needs.

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