5 Important Things You Need to Know About Commercial Business Insurance
by Arina Smith Business Planning 22 May 2018
Commercial business has it tough enough trying to attract and please customers. They don’t need the hassle of worrying about liabilities and exposures. That’s where business insurance comes in handy.
In the following article, we’ll discuss the usefulness of this policy type. We’ll also be covering the crucial considerations you need to make before purchasing a policy. Let’s begin!
Things You Need to Know About Commercial Business Insurance
1. How Much You Actually Need :
Knowing how much commercial insurance requires knowing a few important things about your business. Since no two businesses are the same, neither are the policies that cover them.
A two-man moving business won’t have the same needs as a 200-employee transportation and logistics company. Where you’re located and how long you’ve been in business are other crucial factors.
Other questions you need to consider are as follows:
- Do your employees travel on company business?
- Do you send them in company-owned vehicles? If so, do you own or rent the vehicles?
- Do you own or rent facilities?
Understanding how much your business generates in gross revenue each year also is important. The higher your revenues, the higher your exposures could be if things go south.
2. One Policy May Not Cover Everything :
As we’ve said before, every business differs in what it needs. There are different policies like commercial property, workers’ compensation, and special equipment.
The question of what is Commercial Business insurance coverage is actually several questions in one.
Make sure you’re working with your agent to understand all the ways your business may be exposed.
3. The Difference Between Aggregate and Occurrence Limits :
So you know the definition of Commercial Business insurance, or at least what it means to your company.
Now you need to drill down into more of your policy’s complexities.
Insurance companies measure what they will cover annually in two ways. There is a “per occurrence” amount that allows you to track the cost of single incidents. However, the number you’re probably most concerned about is the “aggregate” amount.
The aggregate amount is the maximum policy protection when adding all incidents throughout the year. It’s your total protection limit.
You need to understand the differences because, according to the Jose Aroeste Farmers Insurance Agency, it can get confusing.
As Aroeste notes, if a business has a $50,000 claim with an aggregate limit of $250,000, they could still be liable even if it’s the only claim they file all year.
All it would take is one $50,000 claim to leave an exposure of $15,000! Be mindful of situations like this, and work with your agent to set satisfactory perimeters to avoid any nasty surprises.
4. What to Do If You Should Exceed Limits :
Businesses fearing overexposure should consider carrying umbrella insurance policies. These are available in $1 million increments typically, more than enough to cover that $15,000 mentioned above.
5. Your Cyber Security Exposures :
Protection from cyber threats may not be covered in the typical Commercial Business insurance policy.
Since most businesses use the Internet in some capacity, this is no small oversight.
In 2016, US companies lost around $17 million to cybercrime. Before leaving that off your policy, ask yourself if that’s something you can afford.
Commercial Businesses Need Protection to Operate Effectively :
The right coverage allows commercial businesses to worry more about their core purpose and less about the unexpected. For more helpful information to run your small business effectively, make sure you check out our previous coverage.
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