Commercial Insurance Basics
American Business Women’s Day is coming up on September 22! We are proud of the women who make Hibbs Insurance a better place, and we want to empower more like them to pursue careers of their choice. That’s why we’ve collected advice from our president, Mike Hibbs, and put together the primer below on various types of commercial insurance.
This is practical information that women (and men) need to understand before starting a small business. However, your insurance needs may vary depending on the nature of your business. Read through the primer and then talk to one of our agents to get specific guidance about your commercial policies.
Businesses typically need multiple types of insurance, so carriers offer “package policies.” These policies bundle property insurance (for your building, business personal property, etc.) and general liability insurance (tailored specifically to your operations).
Carriers typically base the cost of your package policy on your business’s location, the type and size of its building, and your estimated annual gross receipts. Other possible factors include employee payroll, the number of your employees, the number of your locations, etc.
This type of commercial insurance is required by law. Workers’ compensation covers personnel injuries while employees are on the job. Your carrier will base the premium on the “classification” of work your business performs.
For example, the workers’ compensation cost for a roofing contractor would be much greater than that of a retail store owner. Obviously, a roofing contractor’s employees are at a much higher risk for injury than those at the store. Carriers base these premiums primarily on the annual estimated cost of payroll and the number of employee injuries over a period of time, generally three to five years.
Employment Practices Liability Insurance
This category of commercial insurance is a must in today’s business climate, although many business owners overlook it. An employment practices liability policy provides coverage to you—as the business owner—in case an employee files a lawsuit for wrongful termination of employment, sexual harassment, and other occurrences not listed in your general liability policy.
Your premium will be based on your business’s type, its number of employees, and in some cases, its annual cost of payroll.
Commercial Auto Insurance
Commercial Auto Insurance provides your business with auto liability protection. It also covers any physical damage that a company vehicle might incur during day-to-day business operations. This is particularly important because a personal auto insurance policy won’t cover a car while it’s in use for your business.
As a business owner, you should also consider adding non-owned and hired auto liability to your commercial auto policy. This provides you with auto liability coverage if an employee uses their personal vehicle while working for your business.
For example, let’s say that you ask an employee to take the daily deposit to the bank. The employee uses their personal vehicle to drive to the bank and gets involved in an auto accident. Your non-owned & hired auto liability coverage will protect you if an injured party brings a lawsuit against you, as the employer.
Things to Consider
You need to evaluate the type and age of the building you intend to occupy. Any needed repairs or updates could impact your property insurance costs. You will also need to check the driving records for employees who will be driving company cars. Your commercial auto insurance premiums could get expensive if any staff members have a history of accidents.