All you need to know about Commercial Lines Insurance.
Most people are not as aware about insurance as they should be. People with businesses or corporations can benefit a lot from good insurance coverage. One such policy that helps businesses stay afloat is a Commercial Lines Insurance policy.
What is Commercial Lines Insurance?
As per the commercial lines insurance definition, it is a policy that protects businesses from major financial losses that they might not be able to afford on their own. Commercial lines insurance coverage includes other products like property and casualty insurance that ultimately keep the economy running smoothly.
It also includes coverage for commercial auto insurance, workers compensation insurance, medical malpractice insurance, federal flood insurance, ocean marine insurance and aircraft insurance. Commercial lines insurance aims to protect businesses from financially crippling losses like major lawsuits, accidents, natural disasters and other events that may have adverse effects.
The coverage available and premium rates varies business to business. However, the business size, type and location plays a massive role in determining what kind of coverage will be available to you and what the cost of your premiums would be. For example, one of the major issuers of commercial lines insurance in 2013 was American International Group (AIG) which did not have an especially harge market share.
Although all commercial lines insurance policies are essentially the same, it may be tailored to fit your company’s needs better, depending on the type of business you have and your unique needs. For example, a structural engineering firm might need professional liability insurance to protect it against claims of negligence in creating a building’s plans, supervising construction, performing inspections as well as claims of unsuccessful professional services. For businesses like these, general coverage can be purchased along with additional coverage for each project with coverage for punitive damages.
Types of Commercial Lines Insurance
The different types of commercial lines insurance policies have been tailored to cater to specific business needs. A few examples include:
- Debris Removal Insurance.
If you need to remove debris after a catastrophic event like a fire burning a building down, this insurance will cover whatever costs it would need. Before rebuilding, you might need to remove the debris from the old building and property insurance might not cover the cost of removing debris so instead of paying out of your own pocket, this insurance will help you cover the costs.
- Builder’s Risk Insurance.
This insurance will cover the risk of buildings while they are being constructed.
- Glass Insurance.
This will help you cover the cost of broken glass windows in a commercial setting.
- Inland Marine Insurance.
This will help you protect any property in transit or someone else’s property on your premises. For example, if your clothes got damaged in a fire while at the dry cleaners, this insurance policy will cover the cost of the damages.
This insurance policy covers lost income and expenses resulting from property damage or loss. For example, if you have a fire at your firm which causes you to seal the building for two months, this policy coverage will cover your employees’ salaries, taxes, rents and net profit that would have been earned during those two months.
- Demolition Insurance.
Demolition insurance will help you cover the costs that come from demolishing a building that has already been damaged by a peril such as a fire or storm etc. According to zoning requirements or building codes in some states, damaged buildings need to be demolished rather than be repaired. Demolition insurance will cover the cost of tearing down parts of the building that have not been damaged.
- Crop-Hail Insurance.
This is a type of insurance typically purchased by farmers that covers the cost of any damage or destruction caused either by hails or fires. This type of coverage has been specifically designed for farmers and to protect agricultural products while they have not been harvested and are still in the field. Crop-hail insurance essentially aims to protect and cover farmers who are subjected to sudden weather changes resulting in huge losses.
Personal Lines Insurance vs. Commercial Lines Insurance
Commercial lines insurance for dummies usually defines commercial lines in reference to personal lines insurance. The two not only sound similar but they have similar attributes and products in line too.
Personal lines insurance focuses on protecting an individual from any financial losses they might not be able to afford whereas commercial lines insurance protects business from financial losses and keeps the economy running smoothly.
While commercial lines insurance covers small corporations as well as large scale business, personal lines insurance focuses more on an individual’s needs.
The product line includes insurance policies like homeowners insurance, flood insurance, renters insurance, auto insurance, disability insurance etc. These are all essential insurance policies that an individual might need. Not to forget life insurance which is a given and that protects the insured’s family from financial burden after the insured’s passing. It is mostly for family members who are financially dependent on the insured and cannot even afford to pay the funeral costs let alone manage the household expenses and other things after the passing of the insured.
So as you can see, personal lines insurance and commercial lines insurance are pretty similar except they cater to different audiences. Of course, this means that their policy attributes can also differ and so can the premium rates. But both the policies offer the same kind of coverage.
Now that you know what a commercial lines insurance is and how it differs from personal lines insurance, all you need to do is find out what kind of coverage you need. You would also need to know your business type, size and location as it will help you in determining how high your premium rates should be. Once you have determined what kind of coverage you want, you need to reach out to an insurance company to see what policy will be best suited for your business needs.