Types of Commercial Insurance

Topics: Small Business

Summary: Having the proper commercial insurance coverage is critical for small businesses to protect their business, employees and property. We’ll take a closer look at the different types of commercial insurance, which include: As a small business owner, you might be thinking: what types of business insurance do I need? While that answer can vary depending upon the type of business you’re in, there are several types of commercial insurance policies that the majority of small business owners should consider.



Commercial insurance helps businesses stay protected against risks that could impact their success. Some types of business insurance protect the organization's reputation and well-being, while others safeguard the financial aspects. It is different from personal insurance because commercial insurance covers multiple stakeholders and employees and has higher limits of coverage.

Types of Commercial Insurance for Small Businesses

There are many types of commercial insurance small business owners should consider. A few of the most common include:

General Liability

Suppose a customer is injured at your place of business due to something you or your employees did or failed to do. In that case, general liability insurance is designed to cover the potential medical costs and associated legal fees. This kind of coverage also can cover "advertising injury," which can include offenses like copyright infringement and libel.

Property Insurance

Commercial property insurance covers your building and its contents, as well as any resulting impact to your business income, in the event of damage due to falling victim to fire, theft or a natural disaster. Property coverage can be "named-peril," "open-peril" or "special."

Business Interruption Insurance

Major storms, problems with the local electrical grid, or even a hacking incident can interrupt the flow of your business. With business interruption coverage, you can feel confident that your business will be covered through the incident. This coverage is designed to protect your business during covered events and can replace money you would have made or provide funds to operate in an alternate location temporarily.

AmTrust's standard businessowners policy (BOP) includes all three coverages above: general liability, commercial property insurance and business interruption coverage. A BOP is a common insurance solution for small businesses because it can offer cost savings for some of the most common business liabilities. BOP coverage makes it easy to maintain all of the common coverages for businesses like yours without thinking twice about it. Instead of managing multiple policies with multiple carriers, a BOP means you have one policy, one carrier, and one easy process for getting claims covered.

Workers’ Compensation

Small business owners may convince themselves that they don't need the added expense of workers' comp. They might think that an injury could never happen at their company, and even if it did, they would pay out of pocket. But workers' compensation insurance is an absolute necessity for any small business.

Without a workers' compensation policy in force, damages for injuries incurred at work can soar past thousands of dollars and into the millions. Without adequate coverage, employers leave themselves open to punitive damages, pain and suffering lawsuits, and potentially astronomical medical bills.

Workers' compensation insurance is also typically compulsory for a company with more than one employee (check your local requirements). If you compare the cost of a workers' compensation policy with the potential cost of a lawsuit, it just makes sense to be proactive with the proper coverage, as out-of-pocket expenses that are typically covered by a workers' compensation policy – from lost wages to medical – can bring major losses to a company. Even in the most careful and safest work environments, accidents resulting in injuries can – and do, happen. It's always better to be covered and prepared for any accident, however unlikely it may seem.

Commercial Auto Insurance

Why do small businesses need commercial auto insurance? Small businesses have a lot of expenses. Employing workers with fair wages, excellent benefits, and stability is expensive. But making sure that your workers and equipment are protected financially and medically is smart business.

While nobody wants to experience any of these incidents, the truth is that the future can be unpredictable. Even the most careful among us get into an accident every now and then. But helping to protect the business by minimizing the risk with a commercial auto insurance policy is an affordable and cost-effective way to keep employees at work, vehicles on the job, and jobs on schedule.

Employment Practices Liability Insurance (EPLI)

The reality is that any business faces employment-related claims as much as they do a property or general liability claim. If you work with people, your business is a candidate for employment practices liability insurance (EPLI) coverage. Offered on a stand-alone basis or combined with an existing policy, EPLI helps safeguard businesses against employee lawsuits alleging inappropriate or unfair acts. Even when done unknowingly, violating an employee's (or contractor's) rights can have devastating consequences. EPLI can be either claims-made or occurrence-based coverage. Most EPLI policies are written on a claims-made basis, meaning coverage is triggered when a claim is first made against an insured during the policy term.

EPLI typically covers the legal defense fees and settlement costs or damages – up to the policy's coverage limit – whether the employer settles, wins, or loses the case, but coverage options and costs of EPLI policies vary greatly.

If you have employees, vendors or customers, you should consider EPLI coverage. General liability insurance, unlike EPLI, will not typically protect your business from employment-related claims filed by your employees or vendors. Every employer, large or small, can be the target of legal action from past, present and prospective employees.

Cyber Liability Insurance

Small businesses are often prey for identity thieves because they typically have less security in place than larger companies. That's why having a cyber liability insurance policy in place can be crucial, especially for small businesses.

Cyber liability insurance provides coverage for certain losses incurred as a result of data breaches. During a data breach, customer data such as credit card numbers, names, phone numbers, addresses, driver's license numbers, health records, and even social security numbers can end up in the wrong hands. A cyber liability insurance plan will protect a business to cover some of the costs arising from a data breach, such as legal fees and customer notification.

Management Liability Insurance (D&O)

Management liability insurance, also known as directors and officers (D&O) liability insurance, protects directors and officers if they are personally sued when managing a company or nonprofit organization. D&O covers costs and damages (awards and settlements) that arise from wrongful action allegations and lawsuits brought against members of the board of directors or an officer of an organization. A D&O policy can help reimburse a business for the legal fees, settlements and other costs of defending directors against a lawsuit. A director or officer can be part of a lawsuit for a company even if they no longer are part of the executive team or no longer works for the organization.

Errors and Omissions Insurance (E&O)

E&O insurance is also known as professional liability insurance. It is designed to protect a business from the consequences of an error or omission made by the owner or an employee that results in a lawsuit. Companies who provide a service for a fee should acquire E&O insurance, as it covers certain situations that traditional business liability insurance does not. Professionals in the real estate industry, lawyers, insurance-related professionals, financial broker dealers and service firms like architects, designers and medical professionals should all consider purchasing errors and omissions insurance coverage.

Crime Coverage

Commercial crime coverage protects businesses from employee and third-party theft of money, securities and other property. This includes employee theft, computer and electronic funds transfer fraud, fraudulent impersonation and clients' property.

Small Business Commercial Insurance Coverage from AmTrust

AmTrust Financial is one of the nation's largest writers of all types of commercial insurance for small businesses. From our specialized Workers' Compensation coverage to our flexible and extensive Businessowners Policy and comprehensive EPLI coverage, we can help protect your small business from a variety of risks. For more information about our small business insurance products, please contact us today.

This material is for informational purposes only and is not legal or business advice. Neither AmTrust Financial Services, Inc. nor any of its subsidiaries or affiliates represents or warrants that the information contained herein is appropriate or suitable for any specific business or legal purpose. Readers seeking resolution of specific questions should consult their business and/or legal advisors. Coverages may vary by location. Contact your local RSM for more information.

Individual coverage may vary and may not be available in all states. In the event of a conflict with the material herein, the terms and conditions of any issued policy will control. Claim examples are general, may or may not be based on actual claims, and are for illustrative purposes only. Any available coverage for a claim will be determined based on the facts and circumstances of the claim as well as the terms and conditions of the policy, including any applicable exclusions or deductibles.
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