What is a Commercial Insurance Policy? And How Much is Commercial Insurance in 2023?

Running a small business is filled with highs and lows. Amidst all the little victories, milestones, and achievements are feelings of uncertainty and being overwhelmed. Managing the administrative side of things takes a lot of bandwidth, and in some cases can be confusing.

Commercial insurance definitely has a reputation of being mystifying, and with good reason. Insurance is jargony, and there are multiple types of coverage you need to learn about and keep straight. But you don’t have time for research, you’ve got a business to run!

That’s why we’re making it simple by putting much of the info you need in one place. This is our guide to commercial insurance. Read on to learn more about business insurance coverage, cost, and different types of policies.

What is a Commercial Insurance Policy?

A commercial insurance policy — also known as a business insurance policy — describes any number of different coverages geared toward business owners. Three common policy types are:

• General liability insurance
• Professional liability insurance
• Workers’ compensation insurance

While each specific policy type covers different claims, they all have one thing in common: they’re designed to help protect your business. Under the commercial insurance umbrella, you’ll find coverage that may help in the event of medical injuries, property damage, and even threats to your business’ reputation.

How Commercial Insurance Works

The process will vary, depending on which type of commercial insurance you have, but here’s a general rundown of commercial insurance basics if your policy includes tools and equipment coverage.

Say you discover that equipment was stolen from your worksite. Your next step is to file a claim with your insurance provider’s commercial insurance claim adjuster. You’ll work with the commercial insurance adjuster to determine the cost of the loss and what your insurance payout might be, based on your coverage.

How Much is Commercial Insurance?

The cost of business insurance is dependent on a variety of factors. Some of most common types include:

• What type of business you’re operating, and your trade
• Where your business is located
• What services your business provides
• How many people you employ
• Your revenue

These factors go into determining your small business’s risk level. If your services are related to a trade that puts you or your employees into relatively high-risk situations, this will impact your insurance premium.

Is commercial insurance expensive?

The other factor that impacts your commercial insurance premium is the type of coverage you may need. Since “commercial insurance” refers to a panel of various coverage types, the expense will vary greatly, depending on what’s being covered and whether you’ve elected for any add-ons.

Additionally, certain insurance providers specialize in specific trades, so prices can vary, based on the carrier. Ultimately, shopping quotes with different carriers will help you get a better idea of general price points for the insurance your business may need.

Is commercial insurance more expensive than personal insurance?

It’s difficult to compare commercial insurance and personal insurance because it’s like comparing apples to oranges. Just as business insurance refers to a wide variety of coverage types, there are also a large number of different types of personal insurance.

A good rule of thumb with insurance is to think about what is being insured rather than strictly considering policy type. As mentioned above, in general, an insurance premium will be calculated based on a variety of factors, such as the value of what’s being insured and the overall risk it is subject to.

A high-value company may end up with a higher insurance premium than an individual with certain personal policies insuring less valuable items. Likewise, insuring a small business with no employees may be less expensive than insuring a luxury car for personal use.

Why are commercial insurance rates going up?

Recent years have seen a trend in increased premiums across many commercial insurance product lines. While it’s common for industry rates to increase over time, the recent hikes have been linked mostly to inflation and extreme weather events.

Do I Need Commercial Insurance?

Whether or not you need commercial insurance depends on a few factors. Many states have rules that require a business to have at least one insurance coverage such as general liability and workers’ comp. Additionally, the industry you work in might have a set of requirements on its own. Check with your local government or trade association to find out what’s expected of you and your small business.

There also are plenty of reasons to have commercial insurance that exceeds the mandated state minimums.

• It may save you from paying out-of-pocket for damages, legal fees, and theft.
• Depending on your trade, certain clients may not work with you unless you carry insurance.
• It can demonstrate to both clients and employees that safety and security are high on your list of priorities.

Simply Business® understands the importance of protecting your small business. We offer a wide array of commercial business insurance options to suit your needs. We shop quotes from top insurance carriers to find the best fit for your business and budget.

With our online commercial insurance quote tool, we’ll take basic info about your business and what you’re looking for, then we take it from there. Our commercial insurance agents can be reached by phone for further assistance.

Business insurance is more than just meeting the minimum. It’s about helping to protect your business from financial loss.

What are the Different Types of Commercial Insurance?

“Commercial insurance” refers to a wide variety of policy types geared toward protecting businesses from risk.

For the sake of this guide, we’ll stick to a few of the more common forms of commercial coverage.

General liability (GL) insurance.

One common commercial policy type is general liability insurance. A GL policy will typically protect your business from third-party accidents and injury, up to your policy’s limits. It will generally cover the following:

• Third-party property damage
• Third-party bodily injury
• Third-party medical payments
• Personal and advertising injury
• Product liability claims

Basically, it reduces the risk of business owners paying out of pocket for third-party damages for which their business is liable. This could include customers getting hurt on your business’ premises, damage you may have caused to a client’s property, and claims of libel and slander.

Professional liability (PL) insurance.

For small businesses offering services and advice, professional liability insurance typically provides coverage for claims arising from negligence, up to your policy’s limits. If you make a mistake while rendering services and your client files a claim against you for it, PL may cover damages and legal fees.

Here’s a rundown of what PL usually covers:

• Legal costs following a claim of negligence
• Claims involving libel or slander
• Confirmed or alleged negligence
• Damages resulting from your business’s advice or services

Workers’ compensation insurance.

If an employee is injured or becomes sick while on the job, workers’ comp insurance can typically help cover the employee’s costs, up to your policy’s limits. Workers’ compensation may cover the following:

• Medical bills resulting from work-related injury and illness
• Rehabilitation expenses
• Repayment of wages lost due to an employee’s sick leave
• Death benefits to an employee’s family should the work-related injury result in death

Additionally, workers’ comp may cover legal fees if the employee sues your business.

Does Commercial Insurance Cover Theft?

Great question. Ultimately, it comes down to what type of commercial insurance coverage you carry.

While a typical general liability policy won't cover theft, you have other options.

Inland marine insurance, for instance, may come in handy for instances of theft. Don’t let the name fool you — inland marine isn’t an aquatic matter. In general, it covers damage, loss of, and theft of business property that’s used in transit or is stored offsite on land. It’s a great option for contractors, landscapers, and handymen of all types who provide services outside their business’ location.

For property that remains at your workplace, there’s business personal property insurance. This would typically cover office equipment, furniture, and inventory that’s used or rented at your business’ location. This is a coverage that can sometimes be added as part of a GL policy.

Is Commercial Insurance Tax Deductible?

Great news! General and professional liability policy payments are typically tax deductible. As always, however, it’s best to confirm this with a tax professional or accountant. They should be able to advise you on whether other types of commercial insurance are tax deductible as well.

Is Public Liability Insurance the Same as Commercial General Liability?

While public liability and general liability cover situations such as property damage and injury, the two coverages are not the same. Public liability insurance is meant to be somewhat bare bones. It’s a minimalistic policy type that covers claims arising from interactions with the public, such as property damage and bodily injury.

General liability insurance, however, covers a broader range of expenses. While it may seem similar to a public liability policy on the surface, a GL policy can also cover costs such as certain legal fees and claims resulting from defective products.

Getting Back to Business

Researching commercial insurance may be a bit of a headache. But it’s important to make sure your small business is meeting legal requirements and has some protection against a variety of claims and losses. When it comes to insurance, it’s best to err on the side of caution. Make sure all your bases are covered so you can get back to focusing on running and growing your business.