By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Investment Simplified
  • Tax
    • Popular Searches
    • What is Form 16?
    • Trademark Registration Fees
    • TDS Full Form
    • Ad Valorem Tax
    • How to Save Tax?
  • Cryptocurrency
    • Popular Searches
    • Benefits of Using Blockchain Technology
    • What Is A Cryptocurrency Hardware Wallet?
    • What is Market Capitalization In Crypto?
    • What Is Staking In Crypto?
    • Investor’s Guide to Crypto Trading
  • Aadhaar
    • Popular Searches
    • How to Book Aadhaar Card Appointment?
    • E-Aadhaar And It’s Benefits
    • What is a Masked Aadhaar?
    • ESign Aadhaar: A Complete Guide
    • Aadhaar Card Address Change
  • Investment
    • Mutual Funds
      • Popular Searches
      • Tax Saving SIP
      • What is Arbitrage Fund?
      • What are Gold Mutual Funds?
      • What are Contra Funds?
      • Best SIP Plans to Invest
    • EPF
      • Popular Searches
      • EPFO Member Portal – Login, Registration
      • EPFO Establishment Search
      • Guide to Your EPFO Member Login
      • EPF Interest Rate
      • What Is UAN Activation?
  • Insurance
    • General Insurance
      • Popular Searches
      • Home Loan Insurance Calculator
      • What is Marine Insurance?
      • How Does a Marine Insurance Policy Work?
      • Types of Marine Insurance in India
      • Types of General Insurance in India
    • Car Insurance
      • Popular Searches
      • Commercial Vehicle Insurance Guide
      • What is Own Damage Insurance?
      • Car Insurance with Zero Depreciation
      • Engine Protect in Car Insurance
      • Return to Invoice Cover Meaning
    • Travel Insurance
      • Popular Searches
      • Domestic Travel Insurance
      • How to Buy Travel Insurance Online?
      • What is Overseas Travel Insurance?
      • International Travel Insurance
      • What is Travel Medical Insurance?
    • Pension & Retirement
      • Popular Searches
      • Commutation of Pension Calculator
      • EPF Pension calculator
      • Public Provident Fund
      • What is Individual Retirement Account?
      • Calculating PPF
  • Banking
    • Bank Timings
      • Popular Searches
      • Bank of Baroda Timings
      • IDBI Bank Timings
      • Union Bank Timings
      • Karnataka Bank Timings
      • Central Bank of India Timings
      • Canara Bank Timings
    • Mini Statement
      • Popular Searches
      • Axis Bank Mini Statement
      • HDFC Mini Statement
      • Bank of Baroda Mini Statement
      • Union Bank of India Mini Statement
      • SBI Mini Statement
    • Balance Enquiry
      • Popular Searches
      • Canara Bank Balance Check Number
      • SBI Balance Enquiry
      • Union Bank Balance Check Number
      • BOB Balance Enquiry
      • PNB Balance Check
    • NEFT
      • Popular Searches
      • HDFC NEFT
      • SBI NEFT
      • Axis Bank NEFT
      • ICICI Bank NEFT
      • Canara Bank NEFT
    • Net Banking
      • Popular Searches
      • HDFC Bank Net Banking
      • SBI Net Banking
      • ICICI Net Banking
      • Axis Bank Net Banking
      • IOB Net Banking
    • Customer Care
      • Popular Searches
      • Central Bank of India Customer Care Number
      • Bank of Baroda Customer Care Number
      • Bank of Maharashtra Customer Care
      • PNB Customer Care Number
      • IOB Customer Care Number
    • UPI
      • Popular Searches
      • BHIM
      • Google Pay
      • BHIM SBI Pay
      • Union Bank UPI
      • HDFC UPI
    • Debit Card
      • Popular Searches
      • SBI Debit Card
      • HDFC Debit Card
      • PNB Debit Card
      • Axis Bank Debit Card
      • Kotak Debit Card
    • RTGS
      • Popular Searches
      • RTGS Process
      • SBI RTGS
      • ICICI Bank RTGS
      • Axis Bank RTGS
      • HDFC RTGS
    • IMPS
      • Popular Searches
      • IMPS Limit
      • IMPS vs. NEFT
      • IMPS vs. NEFT vs. RTGS
      • MMID
    • Cheque
      • Popular Searches
      • Types of Cheques
      • Blank Cheque
      • Cancelled Cheque
      • Account Payee Cheque
      • Banker’s Cheque
    • Bank Holidays
      • Popular Searches
      • Bank Holidays in February 2023
      • Bank Holidays in March 2023
      • Bank Holidays in April 2023
      • Bank Holidays in May 2023
      • Bank Holidays in June 2023
  • About Us
  • Contact
Reading: What Is Commercial Insurance and How Does It Work
Share
Investment Simplified
Search
  • Tax
    • Popular Searches
    • What is Form 16?
    • Trademark Registration Fees
    • TDS Full Form
    • Ad Valorem Tax
    • How to Save Tax?
  • Cryptocurrency
    • Popular Searches
    • Benefits of Using Blockchain Technology
    • What Is A Cryptocurrency Hardware Wallet?
    • What is Market Capitalization In Crypto?
    • What Is Staking In Crypto?
    • Investor’s Guide to Crypto Trading
  • Aadhaar
    • Popular Searches
    • How to Book Aadhaar Card Appointment?
    • E-Aadhaar And It’s Benefits
    • What is a Masked Aadhaar?
    • ESign Aadhaar: A Complete Guide
    • Aadhaar Card Address Change
  • Investment
    • Mutual Funds
      • Popular Searches
      • Tax Saving SIP
      • What is Arbitrage Fund?
      • What are Gold Mutual Funds?
      • What are Contra Funds?
      • Best SIP Plans to Invest
    • EPF
      • Popular Searches
      • EPFO Member Portal – Login, Registration
      • EPFO Establishment Search
      • Guide to Your EPFO Member Login
      • EPF Interest Rate
      • What Is UAN Activation?
  • Insurance
    • General Insurance
      • Popular Searches
      • Home Loan Insurance Calculator
      • What is Marine Insurance?
      • How Does a Marine Insurance Policy Work?
      • Types of Marine Insurance in India
      • Types of General Insurance in India
    • Car Insurance
      • Popular Searches
      • Commercial Vehicle Insurance Guide
      • What is Own Damage Insurance?
      • Car Insurance with Zero Depreciation
      • Engine Protect in Car Insurance
      • Return to Invoice Cover Meaning
    • Travel Insurance
      • Popular Searches
      • Domestic Travel Insurance
      • How to Buy Travel Insurance Online?
      • What is Overseas Travel Insurance?
      • International Travel Insurance
      • What is Travel Medical Insurance?
    • Pension & Retirement
      • Popular Searches
      • Commutation of Pension Calculator
      • EPF Pension calculator
      • Public Provident Fund
      • What is Individual Retirement Account?
      • Calculating PPF
  • Banking
    • Bank Timings
      • Popular Searches
      • Bank of Baroda Timings
      • IDBI Bank Timings
      • Union Bank Timings
      • Karnataka Bank Timings
      • Central Bank of India Timings
      • Canara Bank Timings
    • Mini Statement
      • Popular Searches
      • Axis Bank Mini Statement
      • HDFC Mini Statement
      • Bank of Baroda Mini Statement
      • Union Bank of India Mini Statement
      • SBI Mini Statement
    • Balance Enquiry
      • Popular Searches
      • Canara Bank Balance Check Number
      • SBI Balance Enquiry
      • Union Bank Balance Check Number
      • BOB Balance Enquiry
      • PNB Balance Check
    • NEFT
      • Popular Searches
      • HDFC NEFT
      • SBI NEFT
      • Axis Bank NEFT
      • ICICI Bank NEFT
      • Canara Bank NEFT
    • Net Banking
      • Popular Searches
      • HDFC Bank Net Banking
      • SBI Net Banking
      • ICICI Net Banking
      • Axis Bank Net Banking
      • IOB Net Banking
    • Customer Care
      • Popular Searches
      • Central Bank of India Customer Care Number
      • Bank of Baroda Customer Care Number
      • Bank of Maharashtra Customer Care
      • PNB Customer Care Number
      • IOB Customer Care Number
    • UPI
      • Popular Searches
      • BHIM
      • Google Pay
      • BHIM SBI Pay
      • Union Bank UPI
      • HDFC UPI
    • Debit Card
      • Popular Searches
      • SBI Debit Card
      • HDFC Debit Card
      • PNB Debit Card
      • Axis Bank Debit Card
      • Kotak Debit Card
    • RTGS
      • Popular Searches
      • RTGS Process
      • SBI RTGS
      • ICICI Bank RTGS
      • Axis Bank RTGS
      • HDFC RTGS
    • IMPS
      • Popular Searches
      • IMPS Limit
      • IMPS vs. NEFT
      • IMPS vs. NEFT vs. RTGS
      • MMID
    • Cheque
      • Popular Searches
      • Types of Cheques
      • Blank Cheque
      • Cancelled Cheque
      • Account Payee Cheque
      • Banker’s Cheque
    • Bank Holidays
      • Popular Searches
      • Bank Holidays in February 2023
      • Bank Holidays in March 2023
      • Bank Holidays in April 2023
      • Bank Holidays in May 2023
      • Bank Holidays in June 2023
  • About Us
  • Contact
Investment Simplified > General Insurance > What Is Commercial Insurance and How Does It Work
General Insurance

What Is Commercial Insurance and How Does It Work

Lakshey Bahl
Lakshey Bahl May 11, 2022 8 Min Read
Updated 2022/06/27 at 1:53 PM
Share
SHARE

Commercial insurance is insurance taken by business owners to ensure the smooth functioning of their business without worrying much about the risks that may threaten their business. Almost all businessmen take commercial insurance as per their needs and prepare themselves for an untoward incident like theft, fire, accident, customer or employee injury or maybe a legal battle. Multiple employees can also be covered by commercial insurance.

Contents
 Different types of commercial insuranceHow much does commercial business cost?How does Commercial Insurance workPros and Cons of Commercial InsuranceFrequently Asked Questions (FAQs)

Insurance agents are trained in such a way that they can explain the perfect type of policy that would meet the needs of a businessman, considering the number of risks and threats each business faces.

Plans and policies are often structured and customised to meet the requirements of the business owners who will be purchasing them. While structuring the policy, the day to day activities and business models are considered.

types of commercial insurance

Key Takeaways

  • Commercial Liability is meant to ensure the smooth functioning of the business despite unexpected occurrences.
  • There are various types of commercial insurance that cover different types of businesses.
  • Commercial auto insurance is meant explicitly for commercial vehicles.

 Different types of commercial insurance

There are many types of commercial insurance. Some of the common ones are as follows.

Property Insurance

This is one of the most commonly used commercial insurance. Any sort of damage to the commercial property like fire, theft, natural calamity, man-made calamity like riots, vandalism etc., is covered in this type of policy.

General liability insurance

This commercial insurance policy is required for leases and contracts. This insurance plan covers the customers against injury and property damage. In large multinational organisations, it covers infrastructure damage, product liability, workers’ compensation etc.

Shopkeepers Insurance

This commercial insurance covers any damage to the shop and its promises, such as theft, fire, goods kept in the shop, personal accident etc.

Commercial auto and equipment breakdown insurance

These commercial insurance policies are for businesses relying on tools and automobiles. Equipment breakdown insurance can be helpful to protect not only these tools but also pieces of equipment like computers, machinery and its parts, etc.

Engineering Insurance

This commercial insurance policy is for engineering and construction coverage. It also extends to heavy machinery, power plants, electronic equipment, transportation systems etc.

Marine Insurance

Such commercial insurance policies are for industries that cover marine cargo risks and risk of damage due to natural calamities like tsunamis, floods, etc.

Aviation Insurance

Apart from this, some other types of Commercial Insurance are:

This commercial insurance covers all types of aircraft or private jets. The crew of the aircraft is also covered in this policy. It also covers damages to tools, equipment or supplies of the company.

  • Bankers’ indemnity insurance
  • Packages and business owners’ policy insurance
  • Business interruption insurance
  • Petrol pump insurance
  • Restaurant insurance
  • Professional liability insurance

How much does commercial business cost?

The cost of commercial business is different for everyone. It varies depending upon the amount of risk  associated with your work and what sort of coverage you need for your business. An insurance agent or broker will take the following factors into consideration while evaluating your premium. These factors are as follows: 

  • Type of business you own
  • Gross annual revenue
  • Location of your business
  • How old is your business
  • Whether you own commercial property
  • Whether you own a commercial vehicle
  • Number of employees in your office
  • Training procedures for employees

How does Commercial Insurance work

  1. Once the policy is suggested to the business owners, they select a plan that suits their needs.
  1. Then, the premium is decided based on the add-ons and specifications the business owners want to protect their business against.
  1. Once the premium amount is finalised, then the deductibles are calculated.

Deductibles are the amount of money payable by the business owners to the insurance company before  the claim is disbursed. In case you are paying less for your insurance policy on a monthly basis, the deductible will be on the higher side.

  1. A cap is set on the policy limits, which is the maximum the insurance company will give on a given claim or over the term of the policy. The policy will only pay up to a certain limit, even if your deductibles are met.
  1. When you take a policy, the exclusions are always clearly mentioned.

Words to remember

Exclusions are the specific circumstances or incidents that the insurance policy does not cover.

Let’s understand how a commercial policy works with the help of an example.

Suppose your staff fails to put out a warning that the floor is wet. A customer walks in and slips on the wet floor, breaking their hand. At the same time, the tile of the floor is broken, and some products that were on display are also damaged. The angry customer punches the staff and breaks his nose. A legal battle then begins between the customer and your business.

Here, general liability insurance will protect your business against legal expenses as well as any compensation that you may have to give to the customer, like paying their medical expenses.

Since your staff was injured in the process, you will have to pay his medical expenses as well. Since you have workers’ compensation insurance, these expenses will be covered. Commercial property insurance will help you recover the expenses of fixing the tile and replacing the product.

If your commercial vehicle was involved in a road accident with a third party while delivering the goods, the commercial auto insurance would cover the compensation required to be paid to the third party for the injuries they sustained, repairs to their damaged vehicle, repairs for your damaged commercial vehicle, injuries that the commercial vehicle driver sustained and any damage to the material that was being transported.

Pros and Cons of Commercial Insurance

Pros of commercial insurance.

  1. Commercial insurance protects businesses against losses and damages caused by natural calamities.
  2. Workers’ compensation safeguards the employee at work and protects them from illness and injury.
  3. Commercial Insurance protects against unforeseen events that could interrupt the business. With insurance, the normal functioning of the business is not hampered as quick recovery is achieved.
  4. Insurance premiums are deductible expenses for tax purposes.

Cons of commercial insurance.

  • Companies may have to take too many insurance policies to protect themselves against different risks.
  • Many claims take a long time to process.
  • Insurance premiums could turn out to be expensive for the business owner.

It is imperative to assess the risks that your business could be exposed to and the ones that could hamper the normal functioning of the business before choosing a commercial insurance plan. The primary objective of commercial insurance is to reduce the unexpected liability that a business may encounter.

Frequently Asked Questions (FAQs)

How to get insurance for imported or exported goods?

Marine and Aviation insurance provides global coverage and includes imported or exported goods.

What is BOP?

A business owner’s policy (BOP)is a combination of different insurance covers meant to provide a customised insurance policy to the business owners and eliminate the need to get multiple insurance policies.

Can insurance policies cover loss of revenue?

In the event of a natural disaster or a fire, the business may have to remain shut for a few days, which affects the revenue. Some commercial insurance policies like the business interruption policy provide protection against loss of income and compensate the business for the revenue loss as a result of specific incidents covered.

What if I have made a mistake and a client suffered because of my mistake? Can insurance protect me against the legal case that the client has imposed on me?

It is natural to make some mistakes, even for professionals. Professional Liability insurance protects against human errors and omissions that occur while conducting the business. Any negligence that could happen from employees of a business because of which the client suffers can be covered under professional liability insurance. It covers legal expenses and any compensation/settlement that needs to be paid to the client.

Share this Article
Facebook Twitter Whatsapp Whatsapp Email Print
Previous Article RD Interest Rates Recurring Deposit Interest Rates
Next Article Best Investment Plans Best Investment Plans With High Returns
Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Popular Searches
  • Home Loan Insurance Calculator
  • What Is Home Loan Insurance
  • Marine Insurance Types
  • What Is Commercial Insurance
  • What Is Commercial Vehicle Insurance
  • Home Insurance Definition
  • General Insurance Types
  • What Is Marine Insurance
  • What Is General Insurance
  • Motor Insurance Basics
  • What Is General Insurance
  • How Marine Insurance Works

Social Media

Social Media
Facebook
YouTube
Instagram
Twitter
Linkedin

Recent Post

Union Bank Holidays
Union Bank Holidays List 2023
Banking
Indian Bank Holidays
Indian Bank Holidays List 2023
Banking
Kotak Bank Holiday
Kotak Mahindra Bank Holidays List 2023
Banking
Axis Bank Holiday
Axis Bank Holidays List 2023
Banking

You Might also Like

HDFC Bank Holidays 2023

HDFC Bank Holidays List 2023

In India, all the banking institutions are required to remain closed on…

Read More
ppf

What is Post Office PPF

As the world surges toward increasingly tight-knit financial systems that are interdependent…

Read More
Central Bank of India Mini Statement Number

Central Bank of India Mini Statement Number

Have an account in the Central Bank of India? You must know…

Read More
Pay Property Tax Online

How to Pay Property Tax Online: Your Comprehensive Guide

Paying tax to the government is a fundamental duty of every Indian…

Read More
IS logo 250px

We are here to make your investment journey simple by delivering content on financial topics in plain English.

Categories

  • Tax
  • Cryptocurrency
  • Aadhaar
  • Mutual Funds
  • Banking
  • General Insurance
  • Pension & Retirement
  • Car Insurance
  • Travel Insurance

Quick Link

  • About Us
  • Contact
  • Terms & Conditions
  • Privacy Policy
Social Media
Facebook
YouTube
Instagram
Twitter
Linkedin

We are here to make your investment journey simple by delivering content on financial topics in plain English.

Categories

  • Tax
  • Cryptocurrency
  • Aadhar
  • Mutual Funds
  • General Insurance
  • Pension & Retirement
  • Car Insurance
  • Travel Insurance

Quick Link

  • About Us
  • Contact
  • Terms & Conditions
  • Privacy Policy

Social Media

Copyright © 2022 Investment Simplified. All rights reserved.

Welcome Back!

Sign in to your account

Lost your password?