If you have a business, large or small, and that business is successful in producing income that you and others depend upon, or that business represents a significant investment risk by you or others, then that business must have the right types and amounts of commercial insurance if it is to be a viable commercial enterprise. To put it another way, if a fire or lawsuit or shipment mishap will result in enough loss of income to your business such that you can’t meet commitments to customers or pay employees, then your business is not viable from the viewpoint of an investor – you can go out of business too easily.
Commercial insurance is designed to provide financial assurance against the likely perils that could jeopardize the existence of your business and result in an unrecoverable loss of both investment in, and income needed, to sustain your business. All businesses do not look or operate alike, nor do they make money the same way. As a result, the commercial insurance coverage needs for one business are not the same as those for another; and the categories and insurance lines for commercial entities reflect this diversity.
This article presents a brief introduction to commercial insurance as the first in a series of articles on this subject planned for this blog. Hopefully, this article series can help a prospective business owner can get an idea of what risks to consider insuring against when planning his or her commercial venture. However, the new business owner should be aware that commercial insurance is a complex mixture of insurance lines that needs to be customized to fit his or her specific risks. One size does not fit all. Find and work with a trustworthy commercial insurance broker or agent by querying other business owners you know, checking with your local Chamber of Commerce, or finding out about local or state associations of commercial insurance brokers in your area.
As an overview, there are two main categories of commercial insurance, property and casualty. Within these categories are lines of insurance. The lines of insurance within the property category include commercial property, inland marine, boiler and machinery, and crime. The lines grouped under the casualty category are commercial automobile, commercial general liability, commercial umbrella, and workers compensation.
It’s helpful to think of the two main categories of commercial insurance as one that protects you financially against perils to your real property that includes not only buildings but inventory, equipment, supplies and personal items that you and your employees use for business; the other assuring financial protection from the risks to your business itself. Risk to the business itself includes perils to others for which you could be liable and extra expenses incurred to keep your business running in the event of a disaster.
Because there is much to learn about commercial insurance, it is easier to organize and digest specific topics as shorter, distinct articles. These articles will be placed into the “commercial insurance” category for your ease in finding them all in one place.
In the meanwhile, please feel free to comment on this article and add any information or resources that you have found useful to understand and effectively use commercial insurance in your business.