Commercial Business Insurance

When we talk of commercial insurance, we mainly talk about four broad categories:

  1. Commercial Property Insurance
  2. Commercial General Liability
  3. Commercial Automobile Insurance
  4. Commercial Umbrella Insurance

In this article we focus on the two main types of commercial insurance that businesses have: Commercial Property Insurance and Commercial Liability Insurance. We will also take a brief look at the coverage areas that fall under each of these types of insurance.

Commercial Property Insurance
Property Insurance is any type of commercial insurance that reimburses an insured party who has suffered a financial loss because property has been damaged or destroyed.

  • Property is considered to be any item that has value and can be classified as real property or personal property. Real property is land and the attachments to it, such as buildings. Personal Property is all property that is not real property.
  • The Building and Personal Property coverage form is used to insure almost all types of commercial property.
  • The insuring agreement in the Building and Personal Property coverage form promises to pay for direct physical loss or damage to covered property at the premises as described in the policy under covered cause of loss.
  • Coverage for the building includes the building and structures, completed additions to covered buildings, outdoor fixtures, permanently installed fixtures, machinery and equipment. The building material used to maintain and service the premises is also insured.
  • Business Personal Property owned by the insured party and used in business is covered for direct loss or damage. This type of commercial insurance policy is also intended to protect against loss or damage to the personal property of others while in the insured party's care.
  • Basic property insurance policies are written to cover fire, lightning, explosion, windstorm, hail, smoke, aircraft or vehicle damage, riot or civil commotion, vandalism, sprinkler leakage, sinkhole collapse and volcanic action.
  • Other property insurance policies add coverage for water damage, weight of snow, ice or sleet, breakage of glass and coverage for falling objects.
  • Most commercial insurance companies use two approaches to determine value of a property:
  1. The replacement cost of a property is the cost to replace it with new property.
  2. Actual cash value ACV) is replacement cost, minus the accumulated depreciation for age and condition.

Commercial Liability Coverage
A Commercial Liability insurance policy provides insurance protection to pay for bodily injury or property damages when the insured is legally responsible.

  • The policy provides coverage for liability arising from personal injury and advertising injury.
  • Coverage for medical expense is also provided. This pays medical expenses resulting from bodily injury caused by an accident on premises owned or rented by the insured party, or locations next to such property, or when caused by the insured's operations.
  • The policy also covers accidents occurring on the premises or away from the premises.
  • Liability coverage is provided for injury or damages arising out of goods or products made or sold by the insured.
  • In addition to the limits, the policy provides supplemental payments for attorney fees, court costs and other expenses associated with a claim or the defense of a liability suit.
  • There are two commercial general liability coverage forms, the occurrence form and the claims-made form. The difference between them lies in the way claims are handled under the two forms. While the occurrence form covers bodily injury or property damage claims that occur during the policy term, the claims-made policy form only covers claims made against the insured during the policy term.
  • The fire damage limit provides liability coverage for fire damage caused by negligence on the part of the insured to rented premises. If a fire occurs because of negligence and damages property not rented to the insured, coverage is provided under the occurrence limit.
  • Coverage is also provided for injury resulting from offenses such as false arrest, malicious prosecution, detention or imprisonment, acts of invasion, or rights of private occupancy of a room.
  • Liability coverage for libel and slander is also provided in the policy. This coverage pays for damages done in the course of oral or written advertisement that disparages, libels or slanders a person's or organization's goods, products or services.

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