What is Commercial Lines Insurance?Posted on Feb 24, 2021
You may have heard the term “commercial lines insurance” and wondered what that means. Simply stated, it means the various types of insurance policies that a business can purchase to protect itself.
Business insurance needs will vary because every business is unique. Even companies within the same industry have things that set them apart from the others. That means you’ll have different priorities, concerns, and needs regarding insurance for your business.
Types of Commercial Lines Insurance Policies
Business Owners Policy (BOP)
The BOP is the fundamental building block for your commercial insurance. It typically consists of four main types of coverages contained in one insurance policy: property insurance, general liability insurance, business income protection, and crime insurance.
Breaking each one of these down:
- Property insurance – protects your building, equipment, and inventory from loss caused by fire, water damage, theft, and certain other specified events
- General liability insurance – covers medical expenses and bodily injury or property damages for which you and your employees are legally responsible
- Business income – if your business has to close temporarily, this coverage helps pay bills and employees until you are back up and running
- Crime insurance – if your business is a victim of theft, fraud, or forgery, this business will reimburse your loss
The BOP also offers other optional options to protect your business, such as equipment breakdown, cyber liability, personal and advertising injury, hired and non-owned vehicle coverage, accounts receivable coverage, and employment practices liability coverage.
Some of these coverages are also available as stand-alone policies or may be bundled with other coverage.
A workers’ compensation insurance policy provides coverage when one of your employees is injured due to an accident or illness caused by exposure to work activities, materials, or equipment.
This policy pays for medical care, including hospitals, doctors, medications, and rehabilitation to treat a work-related injury or illness. It will also provide temporary disability payments for the time the injured employee is unable to work and an award for permanent injury if that is the case.
The workers’ compensation insurance policy will also pay death benefits to families of employees who are killed on the job. Every state mandates this coverage for businesses with employees, and each state has its own rules that employers must follow to ensure proper coverage for injured workers.
Business Automobile Insurance Policy (BAP)
When your business uses cars, trucks, vans, or other vehicles, you must carry a business automobile insurance policy. This policy covers any company used vehicle that travels on public roads. Within a BAP, the coverages include:
- Physical damage coverages:
- Collision – covers damage to the vehicle when it hits or is hit by another object.
- Comprehensive – covers damage to the vehicle from theft, fire, vandalism, flood, and animal-caused damage.
- Bodily injury and property damage liability – covers claims for bodily injury or death or damage to another person resulting from an at-fault accident.
- Medical payments, no-fault or personal injury – covers medical expenses of the driver and passengers who are injured when your business vehicle is in an accident.
- Uninsured and underinsured motorist coverage – covers bodily injuries and damage to your vehicle caused by an uninsured or underinsured at-fault party.
Other Types of Commercial Lines Insurance
The need for any or all of these other commercial lines insurance policies depends on how you choose to protect your business from loss. Some of them include:
- Flood insurance – since most business insurance policies don’t cover losses caused by floods, you should consider buying a commercial flood policy, even if you are in a low-risk flood area. These policies are designed to pay for damages to your building and business personal property should a flood event occur.
- Cyber liability insurance – covers financial losses that result from data breaches and other cyber events. Most cyber policies contain coverage for expenses your business incurs as a result of the breach, as well as claims against your business by people or businesses that have been injured as a result of the breach.
- Employment practices liability insurance (EPLI) – covers damages related to various employment-related claims such as wrongful termination, discrimination, harassment, and retaliation.
- Pollution insurance – covers costs associated with pollution clean-up as well as claims against your business that are related to pollution of property or that causes harmful effects to others.
- Inland marine insurance – covers products, materials, and equipment while they are transported on land.
- Directors and Officers liability insurance (D&O) – protects the personal assets of corporate directors and officers as well as the business if employees sue them, vendors, competitors, investors, customers, or other parties for actual or claimed wrongdoing in managing a business.
- Professional liability (E&O) – covers you and your business if you make a mistake in your professional services.
From the BOP and beyond, Otterstedt Insurance Agency can help you understand the different commercial lines insurance products available to you and which ones will best meet your needs.
Otterstedt Insurance Agency has served New Jersey residents’ needs for business and commercial needs for more than 100 years. Let us help you find the right coverage to manage your risks today and as your needs evolve over time.