What Is Commercial Lines Insurance?
Commercial lines insurance includes property and casualty insurance products for businesses. Commercial lines Insurance protects businesses from potential losses they can't afford to cover and allows companies to operate when it might otherwise be too risky. Commercial policies may be contrasted with personal lines insurance.
Key Takeaways
- Property-casualty insurance includes two major categories: commercial lines and personal lines.
- Commercial lines include insurance products designed for businesses.
- Risks and hazards covered under commercial lines include malpractice insurance, professional liability, and builder's risk.
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Understanding Commercial Lines Insurance
Commercial lines insurance includes commercial auto insurance, workers' compensation insurance, federal flood insurance, aircraft insurance, ocean marine insurance, and medical malpractice insurance. Commercial lines protect businesses against financial losses caused by accidents, lawsuits, and natural disasters.
Available coverages and premium costs vary by business type, size, and location. In 2022, the monthly cost of a business insurance policy ranged from $42 for professional liability to $70 for workers’ compensation.
Each policy is tailored to the type of business covered and the client’s unique needs. A structural engineering firm may need professional liability insurance that protects the company against claims of negligence in creating a building’s plans, performing inspections, and supervising construction. The firm might also purchase general coverage for each project, plus coverage for punitive damages.
Small Business Insurance
A small, home-based business might need one or more commercial lines because homeowners insurance provides limited or no insurance for business activities. A home business might need commercial auto insurance for a company-owned delivery vehicle, worker's compensation insurance for the employee who drives the vehicle, property insurance to cover business goods stolen from the home or vehicle,and liability insurance to protect against claims by any client who claims the company's product harmed them.
Types of Commercial Lines Insurance
Workers' Compensation Insurance
Workers’ compensation is a form of employer insurance coverage that pays benefits to workers who are injured or become disabled as a result of their job.
Debris Removal Insurance
Debris Removal Insurance covers the cost of removing debris after a catastrophic event, such asa fire burningabuilding down. Before rebuilding, the remains of the old building must be removed. Property insurance alone typically won't cover the costsof removing the debris.
Builder's Risk Insurance
Builder's Risk Insuranceinsuresbuildings while under construction.
Glass Insurance
Glass insurance covers broken windows in a commercial establishment.
Inland Marine Insurance
Inland Marine Insurance covers property in transit and other people's property on the business premises. This insurance would cover fire damage to a customer's clothing from a fire at adry cleaning business.
Business Interruption Insurance
Business Interruption Insurance covers lost income and expenses from property damage or loss. If a fire forces a business to close for two months, this insurance would reimburse for salaries, taxes, rents, and net profits that would have been earned during the two months.
Demolition Insurance
Demolition Insurance covers the costs of demolishing a building damaged by aperil,such as a fire or storm. Zoning requirements or building codes may require that a damaged building be demolished rather than repaired. Demolition insurance covers the cost of tearing down undamaged portions of a damaged structure.
Crop-Hail Insurance
Crop-Hail Insurance provides coverage for damage and destruction by hail and fire. Purchased by farmers, it is designed to protect agricultural products while they are still in the field and have yet to be harvested. Crop-hail insurance protects the livelihood of farmers, who are often at the mercy of sudden weather events.
What Factors Determine the Cost of Commercial Lines Insurance?
Factors include the type of business or profession, the number of employees, and the coverage needed for each potential event.
What Is General Liability Insurance?
General liability coverage isa commercial general liability(CGL) insurance that protects businesses from claims of bodily injury, property damage, or personal injury.
What Is Workers' Compensation?
Workers' compensation, or "workers' comp," is agovernment-mandated program and type of employer insurance that provides benefits to workers who become injured or ill on the job or as a result of the job.
The Bottom Line
Commercial lines insurance includes products designed for businesses. Losses covered under commercial lines insurance include malpractice, professional liability, and builder's risk. Home-based businesses may require a commercial line because homeowners insurance commonly provides limited or no insurance for business activities.
