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Types of Business Insurance Coverage

Understand the coverage you need to keep your business protected and up and running.

Business coverage basics

Know how business coverage works and what your options are. Property insurance for business is designed to protect your business’ physical assets against loss or damage from a broad range of causes. There are two basic types:

  1. A “named perils” policy that covers only losses or damage caused by perils – chance events that are unexpected and accidental – that are listed in your policy and subject to exclusions

  2. An “all risk” policy that covers loss or damage caused by any peril, unless specifically excluded

We’ve summarized the basics about business (or commercial) coverages:

  • Coverage options. Your business requires its own set of coverages. In addition to commercial property, other common commercial insurance policies include:

    • accounts receivable

    • business income

    • business interruption (also known as BI)

    • commercial auto

    • commercial general liability (also known as CGL)

    • crime

    • directors’ and officers’ liability

    • professional liability (also known as Errors and Omissions or E&O)

  • Deductible options. The deductible is the part of the loss you must pay when you make a claim. When the deductible goes up, the premium goes down. Essentially, it’s the amount for which your business is self-insured. When selecting* a deductible amount, it’s important to consider:

    • premiums for various deductible options – raising the deductible may or may not be worth it

    • the affordability of paying a higher deductible in the event of a loss

    • working with a risk management consultant to determine optimal deductible levels for your business

*Note: you may not always be able to select the deductible – in some cases, the insurer imposes the deductible.

  • Policy limits. You want adequate coverage without being over-insured and paying too much. To make an accurate calculation, work with your insurance representative and consider:

    • the value of your property – what would it cost to rebuild and replace all your business assets? Make sure you understand any co-insurance conditions in your policy.

    • potential liability exposures – in the event of a lawsuit, insurance pays for legal costs and damages if you’re found to be liable for a person’s injuries and/or damage to their property. Some businesses – such as those that serve alcohol – have higher liability risks and require higher liability limits

    • past losses – use your claims history as a guide when comparing quotes for different policy limit options

  • Your insurance representative. The more they know about your business, the better prepared they’ll be to advise you about marketplace changes as well as types and amounts of coverage. As your business evolves, so will the risks you need to manage and the coverage options that you choose. Be sure to review your policies regularly with your insurance representative.

Types of business insurance

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