Business Insurance, also commonly known as Commercial Insurance is a type of policy specifically meant to cover the risks that a business incurs in its day to day operations.
Traditionally, business insurance has been seen as a more specialized and boutique product compared to the typical consumer insurance policy which in certain segments such as auto insurance has become commoditized.
Business owners have, until recently, had very limited options if they wanted to buy a policy for their business fully online.
As the traditional consumer industry has become saturated and competition for consumers intense, several startups are now attempting to serve the needs of business customers. In this article we will cover a handful which we believe you should be aware of and consider when you are seeking to purchase a policy for your business.
- Coverhound – Coverhound Insurance Solutions, located in California, provides business owners with immediate quotes from a set of partners which includes reputable names in the industry such as Chubb, Liberty Mutual Insurance, Nationwide Insurance, HISCOX, and Progressive.
- Progressive – Progressive was one of the first innovators in the area of online auto insurance, believing they could offer consumers more economical rates by spending less on the traditional consumer acquisition channels. They are now offering business insurance, and you can get a quote from them directly or you can also receive one through CoverHound.
- Zego – Zego is UK based and targets the UK market, and their main focus is providing insurance solutions for business which own and operate fleets of vehicles.
Types of coverage offered by business insurance policies
Business insurance policies generally have different coverages and specifications than the standard auto or home insurance policy most consumers are used to.
The coverages you need will be highly dependent on the business you run, and the coverages below are meant only to provide a sample of the type of options you have available when purchasing your policy.
- Commercial General Liability (CGL) – The standard insurance policy every business owner must have, the CGL protects a business owner from liability claims. An example of a claim would be a restaurant owner who is sued because a consumer fell on the slippery floor of the restaurant.
- Commercial Property Insurance – Very similar to a traditional homeowner property, with several important differences and tailored more towards large commercial properties.
- Business Interruption Insurance – This type of insurance is usually quite expensive, but can be a very powerful protection for unforeseen events.
The coverage is meant to provide for lost income during an unforeseen covered event; though, consumers should be very attentive to the fact that there are significant exclusions to these policies such as terrorism, and damages resulting from a pandemic disease.
- Product Liability Insurance – Meant to provide coverage for damages should the business sell a defective product or one that ends up causing harm to a consumer.
- Errors and Omissions – This type of coverage is meant to cover when a professional makes an error in his or her line of duty which causes damages to a third party.
- Commercial Auto Policy – Similar to a traditional auto policy, but tailored for fleets and has specific provisions depending on who drives the actual vehicles, be it employees for work activities or for personal matters.
Does my business need business insurance?
Due to the nature of how small businesses grow, many start as an individual operation with no insurance, and end up growing organically through their hard efforts.
As a result, many small businesses can end up in a situation where they find themselves with no insurance coverage at all. Many only begin to look at insurance either when they need it because they’ve had some kind of mishap, at which point it is too late, or because a customer requires them to have some kind of coverage. You should attempt to get ahead of this, and realize that at the bare minimum every business needs commercial general liability coverage.
Building on this, the specifics of your business will dictate what additional coverages you need. If you manufacture some proprietary product, you need product liability insurance to ensure you are covered against liability claims from a product malfunction.
If your business has vehicles, then you need to consider the different manners in which employees use them, i.e. do they have a company car?, as that will dictate the kind of coverage you need.
You also need to understand and come to terms with what your personal tolerance for risk is, and how much you are willing to spend, or how much can your business afford to spend for stability and peace of mind.
The maximum expression of this “peace of mind” coverage is the business interruption coverage.
Business interruption insurance can be very expensive, but it can mean the difference between having to shut down and close the business after some unforeseen event, or being able to reopen in a strong financial position due to the policy covering lost income during the covered time period.
Finally, you should understand that sometimes it can take a long time to secure a business insurance policy.
The insurance companies will often want to see additional documents, or it will take you some time to get quotes from various companies to compare, and you want to ensure you have adequate time to do this.
The last thing you want to happen is for you to be in a position where you have to secure an insurance policy in a day or two since you will lose an important customer who is requiring you to have certain insurance coverages if you do not. It pays to get ahead of these matters in insurance.
As you can readily see, business insurance as a whole is a more complex product than auto, home or even life insurance.
Given these considerations, it makes sense that the product has remained offline for so long, but recognizing the general direction and unrelenting advance of technology, we are finally seeing an age in which consumers can fully buy their commercial insurance policies online.