Starting your own business can be really confusing. There is so much paperwork, taxes, and laws that need to be sorted and followed to make sure you're operating properly. Another element that can be especially confusing is commercial insurance. It's hard to know what policies you need, what they cover, and what they don't. If you're feeling this way, you're in luck! Here is your one stop shop for all things commercial to help you figure out your commercial insurance needs.
What Types of Commercial Insurance Are There?
There are many types of commercial policies with various riders to help customize your policy to make sure it suits you and your needs. In this article, we will go over a few main types:
Business Owner Policy (BOP)
Commercial Auto Insurance
Inland Marine (Tool Floater)
In Arizona, if you have one or more employees, you need to carry workers' compensation insurance. So what does it cover? Workers' comp covers the following:
Accidents & Injuries - If an employee is injured while performing job duties, medical expenses will be paid for through the workers' compensation policy. The workers' compensation policy will also cover any ongoing care needed such as surgeries and physical therapy needed to heal.
Lost Wages - If an employee must miss work while needing to recover from a covered injury, workers' compensation will cover these missed wages.
Illness - If an employee develops an illness from poor working conditions, the workers' compensation policy will help cover this.
Funeral Expenses - Workers' compensation will cover funeral costs if an employee dies in a work-related incident.
Disability - Workers' compensation will help provide coverage if an employee suffers from an injury or illness from a work-related incident that prevents them from being able to return to work right away.
Workers' compensation will help provide liability protection from any illnesses or injuries they may suffer while on the job. Not only is this coverage required by law to protect your employees, it is also extremely important to protect you and your assets in case of an injury or illness your employees suffer.
The premium you may pay on a workers' compensation is dependent on a large number of factors, but one of the largest factors in play is the type of job your employees will be performing. The higher risk of injury your employees are exposed to, the more you can expect to pay for workers' compensation insurance.
General liability insurance will protect you from a number of liability claims that you may incur while performing business operations. General liability insurance provides coverage for the following:
Bodily Injury - Your policy will provide coverage for injuries you may cause to others during business operations
Property Damage - Your policy will provide coverage for any property damage you may cause during business operations
Personal and Advertising Injury - Your policy will provide coverage for lawsuits involving defamation, libel, slander, copyright infringement, stolen ideas, or invasion of privacy
Medical Payments - Medical payments coverage provides reimbursement for bodily injury, without regard to fault, up to a specified limit
Products Completed Operations - This coverage provides protection against lawsuits that customers may raise against you from injuries or property damage that resulted from your product or service
Damage to Premises Rented to You - This coverage provides liability protection for any damage that you may cause to any dwelling that you may be renting to perform business operations
General liability coverage will offer extensive liability protection to you while operating your business. Many companies or clients require certain general liability limits before allowing you to work with them. This protects you from the financial stress of having to pay out-of-pocket for any liability expenses that you may incur.
The premium of a general liability policy varies based on a number of factors, but a large portion of the premium will be based upon the type of work you perform. If your line of work has a higher risk of injury to others or may be higher risk of causing property damage to others' property, you can expect to pay higher premiums for a general liability policy.
Business Owners Policy (BOP)
A Business Owners Policy, or BOP, provides extensive protection for your business. It is broken into two sections: liability and property. For the liability protections, a BOP will provide all the same coverages that a general liability policy will offer, so to view all these coverages, refer to the General Liability section.
In addition to the liability coverages, a BOP will cover commercial buildings used for your business as well as any property used in the business operations. This is referred to as business personal property. Items included in business personal property include things like office supplies, computers, furnishings, electronics, machinery, and any other movable item that you may use to operate your business. A BOP will also provide coverage for things like loss of income or debris removal as the result of a covered loss.
There are some coverage exclusions that may apply, so it is important to ask about perils that may not be covered and possibly purchase riders that will help ensure you have the protection you need for your property.
As with general liability, the cost varies based on many factors. The line of business you are in will play a significant role in determining premium. A job that has higher risk of injury to others or to property can be expected to incur a higher premium.
Commercial Auto Insurance
Commercial auto insurance functions in much the same way that a personal auto policy does, but offers much higher limits. Typically, if there is a vehicle being used in your day-to-day business operations, such as delivering products, carrying tools, transporting clients, run errands for the business, etc., then you will need a commercial auto insurance policy. A commercial auto policy covers the following:
Bodily Injury - Provides coverage for any injuries that you cause to others
Property Damage - Provides coverage for any damage to property that you may have caused, such as damage to vehicles, guardrails, telephone poles, etc.
Collision - Provides coverage for the vehicle in cases where the vehicle collides with another car or object or is overturned
Comprehensive - Provides coverage for the vehicle in circumstances other than collision, such as theft, vandalism, wind and/or hail, flying objects, etc.
As you can see, the coverages on a commercial auto policy are the same as those offered on a personal auto policy, but the liability limits on a commercial auto policy are significantly higher. This is due to a higher exposure to risk in a commercial capacity than in a personal capacity. The assets of a business are typically higher than personal assets, so the amount of risk of asset loss is higher in a commercial policy. Having higher liability limits will help protect the assets of your business in the case of an accident.
The premium of a commercial auto policy is determined heavily by the driving record of all drivers on the policy, the types of vehicles being insured, and your claims history. There are other factors that play a role in determining premium, but if your drivers have poor driving records or you have a significant claims history, you can expect to pay a higher premium for your commercial auto insurance.
Inland Marine (Tool Floater)
An inland marine, or tool floater, policy, is essential for businesses with tools and equipment that is typically stored in a vehicle or is constantly transporting to and from job sites. An inland marine policy will cover your tools and equipment that are damaged or stolen. For instance, if you store your tools or equipment in a vehicle and they are stolen out of your vehicle, the inland marine policy will provide coverage for this equipment.
An inland marine policy is great for contractors and business owners that transport tools and equipment often. If you find that you have equipment that you are moving often, an inland marine policy is an essential policy for you.
The premium of an inland marine policy is heavily dependent on the value of the tools and equipment that you are insuring.
Whether you are opening up a new business or have been in business for years, now is the right time to make sure you have the coverage you need. The last thing you want as a business owner is to have gaps in coverage and to lose your livelihood. Give us a call at (602)337-2723 or click the button below to contact us to go over your commercial insurance needs!