Types of Commercial Insurance

 Types of Commercial Insurance

Commercial insurance is typically the property and liability insurance policies that a commercial enterprise would need to cover the business from the losses that occur from business operations.

There are so many different exposures and insurance policies that an exhaustive list is too time consuming to address here. However, here are some common exposures and an example of the type of commercial insurance policy that would apply:

·         Damage to your building: Commercial Property insurance

·         Slip or fall on your premises: Commercial Liability insurance

·         Auto accident involving company owned vehicle: Commercial Auto insurance

·         Person injured because your product failed: Product Liabillity insurance

·         Employee injured at work: Workers Compensation insurance

·         Employee injures 3rd party while drunk after company holiday party: Host Liquor Liability insurance

·         Wage discrimination: Employment Practices insurance

·         Loss of cargo being sent to Europe: Ocean Marine insurance

As you can see, there are many ways that a business can suffer financial loss , and there are many insurance products that have been designed to help businesses protect their assets.

Different types of commercial insurance are as follows

a) Liability insurance

b) Director’s and office liability insurance

c) Shop insurance

d) Fire insurance

e) Burglary insurance

f) Marine insurance

g) Construction risk insurance

h) Plant and machinery insurance

i) Worker’s compensation insurance

j) Business insurance

k) Cargo insurance

l) General or public liability insurance

m) Transit insurance

n) Cyber insurance

 

Types of commercial insurance

·         Property Insurance

·         Liability insurance

·         Workers compensation

·         Auto insurance

·         Glass Insurance

·         Business Owner’s Policy

 

Commercial Insurance

Commercial Insurance Overview:

Commercial insurance is offered to commercial entities such as businessmen, industries etc. and provides cover for various business and related needs. Commercial insurance is a type of business insurance that offers solutions for industrial sectors including but not limited to construction, manufacturing, telecom, textiles, logistics etc. These solutions aim to offer a safety net for business operations and assets when the need arises.

 

Types of Commercial Insurance Policy:

Common commercial insurance types include property, workers’ and liability compensation. The types of policies depend on the business and most insurers will have special packages for businesses that fall under their solutions purview.

Property Insurance

This is one of the most common types of commercial insurance. The policies cover damages to your commercial properties. For instance, a fire damaging your office space will be covered under such policies.

Shopkeeper’s Insurance

This type of policy covers damage to shop buildings and contents, housebreaking, burglary, cash insurance, bicycles, signboards, baggage, personal accident, liability etc. as per policy wordings.

Marine Insurance

These policies deals with coverage for marine cargo risks for industries such as oil and gas, power generation, wind power, paper and pulp, steel mills, infrastructure, machinery upgrades and so on.

Liability Insurance

These policies are aimed at large multi nationals looking to offset business liability risks in diverse locations around the world. The policy will typically cover bodily or personal injury and infrastructure damage, product liability, clinical trials, product recall, workers’ compensation etc.

Engineering Insurance

Engineering and construction covers are offered under such a policy. The policy covers defined engineering risk classes including oil and gas, power, heavy industries, constructions, transportation systems etc.

Energy Insurance

These policies offer flexible covers for challenging onshore and offshore industries and provides comprehensive cover including downstream, midstream and upstream assets and operations.

Employee Benefits Insurance

These policies will ideally provide health insurance cover to employees of organizations such as group mediclaim or group personal accident plans.

International Insurance

These policies provide customized services that address cross border issues of companies while considering the fiscal and regulatory framework of the region where they are operating.

Plate Glass Insurance

The policy will cover damages to plate glass or store windows in the event they are broken.

Aviation Insurance

These policies typically provide cover for all types of aircraft such as small aircrafts or private jets against disappearance, total loss etc. The policy also covers damages to equipment, tools or supplies of the company, apart from dangers arising out of war and other acts of aggressions. Crew members are also covered under such policies.

Bankers Indemnity Insurance

These policies are aimed at banks and cover all branches of a particular bank in the country. The policies offer cover against cash or securities lost on premises, in transit, forgery, dishonesty, hypothecated goods, registered postal losses and appraisers, among others.

Automobile Insurance

These policies cover damages or loss to commercial cars, trucks, vans or other vehicles as well as injuries to property or persons.

 

What is Commercial Insurance?

Commercial insurance offers protection to businesses from any unforeseen issues. Some of the most common insurance policies are shopkeepers’ insurance, warehouse insurance, transit insurance, product and public liability insurance, employee liability insurance, marine insurance, property insurance and many more. These policies provide a safety net to business owners in case of any problem.

Types of Commercial Insurance

Let us look at some of the types of commercial insurance available in India that can help minimise and handle various risks related to businesses.

1. Shopkeepers’ Insurance: Shopkeepers’ insurance policy is an ideal choice for retail shopkeepers dealing in grocery, apparels, small restaurants, sweet shop, etc. The comprehensive policy covers all the risks and contingencies faced by small or mid-sized shop owners. It covers the losses related to following issues:
• Fire & Allied Perils
• Burglary and housebreaking
• Machinery breakdown
• Personal accident

2. Transit Insurance: When valuable business goods are transported from one location to another, for example, from supplier’s factory to the retail outlet, you should consider transit insurance to cover any loss due to damage or loss of the consignment. The responsibility of taking the transit insurance policy must be determined in the sales contract, and the insurance must be taken well before goods leave the supplier’s premises. Transit insurance only applies to the goods transported over land. Following are the goods which are covered under transit insurance:

• Packaging material
• Manufactured goods
• Raw materials

3. Commercial Vehicle Insurance: Vehicle owners who are in the business of transporting passengers or goods must take commercial vehicle insurance that covers the commercial vehicle against various types of external damage. Some of the important features of commercial vehicle insurance are:
• Death or bodily injury caused by the use of the vehicle
• Any damage to the property because of the use of the vehicle

4. Liability Insurance: This policy offers protection to businesses and individuals from risk that they may be held legally and liable for, especially in the case of hospitals and business owners. For example, a factory owner may face a liability claim from the employees who gets electrocuted inside the factory. The employee liability insurance may help in such a situation and handle the treatment costs along with legal costs, if any arise.

5. Warehouse Insurance: Businesses in which majority of the functions are dependent and happens in multiple warehouses may consider buying a warehouse insurance. It covers natural calamity, fire and similar unforeseen situations. Moreover, you can get the compensation against human-made hazards like theft and burglary.

6. Marine Insurance: When goods are shipped to international destinations through the sea, it undergoes several changeovers. It travels by rail, road, water and perhaps airways as well. It also changes many hands before it reaches the final destination. The shipowners take Hull and Machinery insurance to protect the ship’s basic structure and machinery. The cargo owners take marine cargo insurance to protect the consignment under transit. The marine policy may cover specific time-frame or the voyage or both. Make sure to strike the correct balance between adequate coverage and reasonable insurance premium to avail optimum coverage for your cargo.

7. Office Package Insurance: This type of insurance protects one’s office and everything under the roof, including the infrastructure. It offers protection to the office premises, in case of any damage due to fire, theft, burglary, earthquake, etc. It also provides personal accident coverage. One should understand all the points that are included and excluded in the policy. For instance, the policy does not cover any problem arising due to illegal activity or war-like situation.

Coverage under Commercial Insurance

Various types of commercial insurance offer coverage for various cases and situations. Let us understand some types of coverage provided by various insurance companies.

• Home insurance covers the house and the content inside the structure
• Group health insurance covers medical expenses during hospitalisation
• Liability insurance covers costs of lawsuits and other damage to person or property due to your business, profession or vehicle
• Transit insurance offers coverage for loss or damage to any cargo during transportation

The above mentioned list is not limited to these points. The complete list is available on the official website of various insurance companies.

Claim Process

In case of any unforeseen damage, you need to immediately inform the insurance company about the eventuality through its 24/7 insurance helpline. You should be aware of the claim process and follow it properly in order to avoid any claim rejections. However, the claim process and the documents required vary for different insurance companies and plans. Here is a basic understanding of how to go about the claim process.

• Inform the insurance company, if you need to make the claim
• Provide the details like policy number and other documents, including duly filled in claim form
• Provide the witnesses, proofs, FIR copy, medical reports, etc., as per the requirement of the type of your insurance plan
• On receiving the documents, a surveyor from the insurance company will verify all the details
• If accepted, the claim is processed within the stipulated time, else it might be rejected

Exclusions under Commercial Insurance

While offering coverage, insurance companies do not include all cases and situations. The damage and loss that are not covered by the insurance firms are called exclusions. There are different sets of exclusions for different insurance types and plans. The list mentioned here does not include all the exclusions. To know them in detail, please visit the official website of that particular insurance provider.

• For any insurance policy, any regular wear and tear or wilful negligence is not covered
• Any loss due to war or war like perils is not covered

Companies Offering Commercial Insurance Plans in India

With more awareness, an increasing number of people are now considering buying various types of commercial insurance for their business needs and requirements. Some of the companies selling different types are:

• HDFC ERGO
• New India Assurance
• Bajaj Allianz
• Bharti AXA
• United India Insurance
• ICICI Lombard
• TATA AIG

Important Aspects

Not all insurance companies provide all kinds of insurance policies and the coverage varies from company to company. According to your need, make sure to examine all terms and conditions of the insurance policy that suits your specific business needs. Some of the points to be considered are:

• Make sure not to underestimate the valuation of the property under insurance. You may save a few hundred rupees but may land up in huge losses in case of an unfortunate event
• Make a complete declaration of the nature of your business, your perceived risk and probable causes of loses. The insurance company may reject your claim, if significant information is not disclosed or misrepresented while taking the policy
• Avoid exaggerated or false claims, as it can result in denial of the insurance. The serious misleading claims are considered fraud, and the insurance company may file police complaints against such an act

Advantages of Commercial Insurance

To safeguard your business and property from any unseen circumstances and to handle the associated financial risks, it makes sense to opt for commercial insurance. Some of the advantages are:

• If you are running a company or owning an office, you would need insurance to protect your premises and employees. For this, you can select the appropriate type of commercial insurance for yourself. This protects you from all possible financial risks
• In case your business deals with commercial vehicles, you cannot ignore commercial vehicle insurance. This gives you a chance to manage the heavy costs incurred in case of any accident or eventualities
• In case your profession or business happens to deal with clients or third party, a liability insurance under commercial insurance is a must in order to manage the losses and any costs for legal issues

What Is Commercial Lines Insurance?

Commercial lines insurance includes property and casualty insurance products for businesses. Commercial lines Insurance helps keep the economy running smoothly by protecting businesses from potential losses they couldn’t afford to cover on their own, which allows businesses to operate when it might otherwise be too risky to do so.

Commercial policies may be contrasted with personal lines insurance.

KEY TAKEAWAYS

• Property casualty insurance can be broken down into two major categories: commercial lines and personal lines.
• Commercial lines accounts for about half of the U.S. property casualty insurance industry, and includes the many kinds of insurance products designed for businesses.
• Risks and hazards covered under commercial lines include, for example, malpractice insurance, professional liability, builder's risk, crop insurance, and many other industry-specific coverages.

Understanding Commercial Lines Insurance

Commercial lines insurance include products, such as commercial auto insurance, workers compensation insurance, federal flood insurance, aircraft insurance, ocean marine insurance, and medical malpractice insurance. Commercial lines protect businesses against potentially devastating financial losses caused by accidents, lawsuits, natural disasters, and other adverse events. Available coverages and premium costs vary by business type, size, and location. In 2013, the five largest issuers of commercial lines, as measured by the amount of premiums written, were American International Group (AIG), Travelers, Liberty Mutual, Zurich Insurance Group and ACE Ltd. None of these companies had an especially large market share.

While all commercial lines share some similarities, each policy will be tailored for the type of business being covered and the client’s unique needs. Suppose a structural engineering firm needs professional liability insurance. An insurance policy could protect the company against claims of negligence in creating a building’s plans, performing inspections, and supervising construction, as well as against claims of failure to render professional services. The firm could purchase general coverage as well as specific, additional coverage for each project, plus coverage for punitive damages.

Other Considerations

Commercial lines aren’t just for large corporations. Even a small, home-based business might need one or more commercial lines because homeowners insurance provides limited or no insurance for business activities. For example, a home business might need commercial auto insurance for a company-owned delivery vehicle, workers compensation insurance for the employee who drives the vehicle, property insurance to cover business goods stolen from the home or vehicle and liability insurance to protect against claims by any client who claims the business’s product harmed them.

Types of Commercial Lines Insurance

There are several different types of commercial lines insurance, with many policy types tailored to a specific industry or industry-specific hazard. Here are just a few examples:

• Debris Removal Insurance: this insurance covers the cost of removing debris after a catastrophic event, such as a fire burning a building down. Before rebuilding, the remains of the old building must be removed. Property insurance alone typically won't cover the costs of removing the debris.
• Builder's Risk Insurance: this coverage insures buildings while they are being constructed.
• Glass Insurance: glass insurance covers broken windows in a commercial establishment.
• Inland Marine Insurance: this covers property in transit and other people's property on your premises. For example, this insurance would cover fire-damage to customers' clothing from a fire at a dry cleaning business.
• Business Interruption Insurance: this insurance covers lost income and expenses resulting from property damage or loss. For example, if a fire forces you to close your doors for two months, this insurance would reimburse you for salaries, taxes, rents, and net profits that would have been earned during the two-month period.
• Demolition Insurance: used to cover the costs of demolishing a building that is damaged by a peril, such as a fire or storm. Zoning requirements or building codes may require that a damaged building be demolished rather than repaired. Demolition insurance covers the cost of tearing down undamaged portions of a damaged structure.
• Crop-Hail Insurance: a type of insurance that provides coverage for damage and destruction by hail and fire. Purchased by farmers, it is designed to protect agricultural products while they are still in the field and have yet to be harvested. Crop-hail insurance protects the livelihood of farmers, who are often at the mercy of sudden weather events.