Different Types of Commercial Insurance
most common types of commercial insurance are property, liability and
workers' compensation. In general, property insurance covers damages to
your business property; liability insurance covers damages to third
parties; and workers' compensation insurance covers on-the-job injuries
to your employees. Depending on your business, you may want additional
specialized coverages. Listed below are some of the different types of
insurance pays for losses and damages to real or personal property.
For example, a property insurance policy would cover fire damage to
your office space. You can purchase additional coverages for business
Boiler and Machinery Insurance
and machinery insurance, sometimes referred to as "equipment
breakdown" or "mechanical breakdown coverage," provides coverage for
the accidental breakdown of boilers, machinery, and equipment. This
type of coverage usually will reimburse you for property damage and
business interruption losses. For example, this coverage would cover
fire damage to computers.
Debris Removal Insurance
removal insurance covers the cost of removing debris after a fire,
flood, windstorm, etc. For example, a fire burns your building to the
ground. Before you can start rebuilding, the remains of the old building
have to be removed. Your property insurance will cover the costs of
rebuilding, but not of removing the debris.
Builder's Risk Insurance
risk insurance covers buildings while they are being constructed. For
example, a Builder's risk policy would cover losses if a windstorm
takes down your partially constructed condominium complex.
Glass insurance covers broken store windows and plate glass windows.
Inland Marine Insurance
marine insurance 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 your dry cleaning
Business Interruption Insurance
interruption 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.
Ordinance or Law Insurance
or law insurance covers the costs associated with having to demolish
and rebuild to code when your building has been partially destroyed
(usually 50 percent). For example, your three-story building is 100
years old. A flood destroys the basement and first two stories. Because
more than 50 percent of your building has to be rebuilt, a local
ordinance requires that the building be completely demolished and
rebuilt according to current building codes. Property insurance covers
only the replacement value, not the upgrade.
leases often require tenants to carry a certain amount of insurance. A
renter's commercial policy covers damages to improvements you make to
your rental space and damages to the building caused by the negligence
of your employees.
Crime insurance covers theft, burglary, and robbery of money, securities, stock, and fixtures from employees and outsiders.
A bond company covers losses due to a bonded employee's theft of business property and money.