Published on May 15, 2024

7 Types of Commercial Insurance Explained

Insurance is useful for financially protecting your business from disaster. But of course, there are many different types of disaster that can occur in business. No single policy is likely to cover all of these disasters, so you need to pick and choose which disasters to cover your business against. This post delves into 7 of the most common commercial insurance policies and what coverage they provide so that you pick the right forms of insurance. 

Employer’s liability insurance

If an employee gets injured or sick for work-related reasons and decides to file a legal claim, employer’s liability insurance can cover the cost of this claim. It is mandatory for all employers to have this coverage in place. So if thinking of taking on employees, make sure that you apply for this insurance first. Employer’s liability insurance rates can vary depending on how dangerous your industry and workplace is viewed to be. If your employees are working in an office doing clerical work, you can expect insurance rates to be relatively low. If your employees work on a building site or in a factory, insurance rates could be a lot higher. 

Public liability insurance

While employer’s liability insurance covers injuries to employees, public liability insurance covers personal injuries to third parties (which could include customers, suppliers or general members of the public) that are caused by your negligence. This could include a customer suing you after slipping and injuring themselves on a wet floor, or a supplier bumping their head on an unsignposted low ceiling. Public liability insurance can also cover you against claims related to third-party property damage. For example, if you’re delivering a sofa to a customer and accidentally break one of their possessions while moving it in, this insurance can cover you. Unlike public liability insurance, this policy is not mandatory, although it is highly recommended that all tradespeople consider it. 

Professional indemnity insurance

Professional indemnity insurance covers lawsuits made by customers or third parties as a result of a breach of contract or inability to carry out certain clear duties. For example, if you fail to miss a client deadline or offer bad advice, any lawsuit you receive could be covered by this insurance scheme. Professional services like surveying, financial consultancy, digital marketing and accounting can all benefit from taking out this insurance policy. You may find some specialist insurers such as medical indemnity specialists that offer industry-specific indemnity policies. 

Product liability insurance

This form of insurance is specific to companies that manufacture or sell products. If your product becomes faulty and injures someone/causes damage to someone’s property, public liability insurance can provide compensation in the event that they file a lawsuit. Rates for this insurance policy can vary depending on the risk of your product causing injury or damage to property, as well as the risk of someone suing if this happens. For this reason, products like electronic toys can cost more to insure than products like clothing. 

Commercial building insurance

Commercial building insurance could be useful to look into if you operate from a building such as a store, office, factory or clinic. It can help to cover the cost of repairing your building or replacing contents that are damaged in the event of a fire, natural disaster or crime. Some commercial building insurance policies do not cover specific disasters like burglary or floods, so it’s important to look into the full extent of the coverage before applying. Your rates are likely to depend on how high-risk your premises are – good fire safety, security and natural disaster protection could result in low rates. 

Business interruption insurance

An unexpected event such as a flood or a fire could also cause unexpected downtime for your business, which could result in a loss of income. Business interruption insurance can provide you with compensation to make up for any income you have lost. It is worth having alongside commercial building insurance. Be wary that some business interruption insurance policies will also cover you for any downtime caused by illness or the breakdown of essential equipment. 

Cyber insurance

Cyberattacks can cause a lot of financial damage to businesses. One way to protect yourself financially from a potential cyberattack is to take out cyber insurance. This can cover the cost of hardware restoration/repair, loss of income or lawsuits from employees/clients as a result of a cyber attack. Cyber insurance rates are dependent on how digitally secure your business is – a company with less cybersecurity in place can expect to pay higher rates. 

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