Understanding Commercial Insurance: What it is and Why You Need it

Are you the owner of a business? Or perhaps you’re an HR person who’s responsible for a company’s financial products? Either way, you’ll have probably heard of commercial insurance before and find yourself searching for products & providers to meet your company’s specific needs.

But to know what kind of commercial insurance will be right for your business, you need to have a clear idea of what it is and everything it includes

To help you understand the ins and outs of commercial insurance, we’ve put together this overview.

What is Commercial Insurance?

Commercial insurance is an umbrella term used to describe insurance policies that protect a business and its interests. It’s especially recommended for commercial property owners and those in industries including engineering and industrial manufacturing, construction, aviation, hospitality & retail.

The Pros and Cons of Commercial Insurance

While commercial insurance is a must have for the savvy business owner, it is not without its disadvantages. Let’s take a look at both the pros and cons to help you gain insight.

Commercial Insurance Pros

  • Protects your premises: In the event of a fire, robbery, vandalism or accident you’ll be grateful for your commercial insurance policy. Nothing slows your business down like a disruption in the workflow.
  • Protects your business as a whole: From employees who get injured on the job, to an unintended breach of contract—there are many instances that call for a commercial insurance policy. On top of paying the settlements, many providers will cover legal fees.
  • Increases customer confidence: Customers and clients will experience peace of mind knowing they’re covered in the event of a public liability instance or a professional indemnity instance.
  • Supplements income: In the event of natural disasters and catastrophes, a commercial insurance policy will typically pay you out what your company would’ve earned in the time it was forced to cease operating.

Commercial Insurance Cons

  • Added expense: For many a business owner, commercial insurance premiums are an expense they just can’t afford. This is especially true in the case of small business owners who don’t have an excess of disposable income.
  • Slow to pay out: Due to the complex nature of claims, commercial insurance providers tend to take a while to pay out claims when compared to the claim processing time of personal insurance providers.

How to Choose a Commercial Insurance Product

Because every business is unique, it’s difficult to narrow down a step by step process to pick a commercial insurance product. What works for one company might not work for another.

Here are a few general guidelines to help you pick a policy:

  • Establish your needs: Do you have many customers visiting your premises? Are you on the road a lot and need to cover your equipment? Do you have employees that work for your company? These are the kind of questions you need to ask yourself.
  • Shop around: Before settling on a commercial insurance provider, request and compare quotes from three to four other providers. This is purely to make sure you’re getting the best monthly premium for what you need.
  • Read the fine print: Before dotting the i’s and crossing the t’s of your insurance agreement, be sure to know exactly what you’re signing up for & what your policy includes as well as excludes. Feel free to ask your insurance broker any questions that arise.
  • Make sure the policy is flexible: You don’t always know what your business will look like a year from now, so make sure you’re able to review and amend your policy as needed. You might need to increase or decrease your level of coverage.

How to Choose a Commercial Insurance Provider

There is a plethora of commercial insurance providers who are vying for your business’s business. When it comes to selecting a provider, you’re in control.

Here are the best ways to pick a commercial insurance provider:

  • Word of mouth: If you’re friends or associated with other business owners, ask them which company provides commercial insurance to their businesses and what their experience has been like so far. A personal recommendation is a powerful tool.
  • Do your research: Always opt for a commercial insurance provider that has been around for a while. Read online reviews and ask your network if they’ve heard anything about the provider.
  • Work with your business: If you’re a small business owner, award your business to a provider that specialises in small business insurance. If your cash flow doesn’t allow for annual payments, opt for a provider that accepts monthly premium payments.
  • Make sure your docs are in a row: A commercial insurance provider needs to supply you with a certificate of insurance as proof of your coverage. If a provider doesn’t offer this service—take your business elsewhere, ASAP.

Final Thoughts

We hope that this article has helped you to understand more about what commercial insurance is. The good news is that if you need a commercial insurance broker Melbourne is brimming with them.

If any questions you have haven’t been addressed above, you’re encouraged to leave them in the comments section below and we’ll be happy to answer them.

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