What is commercial insurance?

So, you’ve started the satisfying and empowering journey of being your own boss and running your own company. After all the groundwork of building a business, you’re now envisioning entrepreneurial bliss: offering the best service, …

What is commercial Insurance?

So, you’ve started the satisfying and empowering journey of being your own boss and running your own company.

After all the groundwork of building a business, you’re now envisioning entrepreneurial bliss: offering the best service, having happy and loyal clients, and working with a team of dedicated employees.

While it is enjoyable to imagine a summary future of business success, part of what comes with running a company is the responsibility of preparing for the rainy days and worst-case scenarios.

The best way to face potential future challenges is to opt for commercial insurance. We understand commercial insurance may not the most exciting task on your to do list, so to save you some time scouring Google, here is everything you need to know about taking out commercial insurance.

What is commercial insurance?

Commercial insurance is a form of insurance that you take out to protect your business from any losses or damages, particularly financial ones, and includes a variation of policies depending on your business, as different businesses incur different risks.

For example, if you were running your own counseling business, you may need a commercial insurance policy that covers cyber insurance to protect client data, or if you were an electrician, you’d need insurance that covers your work tools.

Let’s dive right in, and look in more detail at what commercial insurance is, and why you need it.

Why Do I Need Commercial Insurance?

You need commercial insurance as it aims to help a business stay protected against any risks that may threaten its success. This includes protecting the reputation, wellbeing and financial stability of the business, as well as protecting your employees.

In addition, if you have employees working for you – even if it’s just one employee, then you’ll need employers’ liability insurance, covered with commercial insurance, which is mandatory and you could face a fine of £2,500 for every day of being without.

Another benefit of commercial insurance as opposed to personal insurance, is that it has higher units of coverage, benefitting businesses that have more physical property at stake.

In addition, commercial insurance policies are tailored to the risks that are specific to what businesses face on a day-to-day basis, whereas personal insurance has a broader, one size fits all approach, which may not benefit your company in terms of what actually needs to be insured.

How Does Commercial Insurance work?

Commercial insurance is not actually the complex machine we may believe it to be.

The process of having commercial insurance is simple, which is exactly what you want when faced with challenges of financial loss and damages to your company.

A commercial insurance policy will be a contract between the insurance company and your business.

In this contract, the insurance provider agrees to offer financial protection in the event of a specific loss, which must be unexpected or accidental in order to be covered by the policy.

When the event takes place, your business will file a claim in which the commercial insurance provider will assess the damage or the loss and process a claim, resulting in your company receiving the necessary compensation for the loss it has suffered.

An example of an event where your company would need commercial insurance is if someone breaks into your office space and steals all your company’s laptops. Instead of pulling your hair out and screaming, ‘Why?!’ to the heavens, all you need to do is file a claim with your commercial insurance provider and they will then investigate and assess the situation. Lastly, they will offer you the necessary funds for new laptops and the cost of replacing any windows or doors that may have been smashed or broken during the event.

Of course, some companies may experience more complex and challenging situations which will be covered by a liability claim.

An example of this includes an event in which there may be a lawsuit against your business, where a customer, client or even an employee believes your business has caused them financial damage and they are seeking compensation from you.

In a situation where someone attempts to sue your business for an event that is covered by your policy, your insurance provider may connect you to lawyers and cover court fees and costs.

Because every situation, risk and threat is different, the process of making a claim with your commercial insurance provider will differ, depending on the size of the claim, whether the event can be resolved with an insurance payment and if the claim results in a lawsuit.

Again, this is why it is important to consider the threats and risks applicable to your business to take out a policy that fits the needs of your company.

What Does Commercial Insurance Cover?

There are a whole range of different types of policies in order to cover the variation between business, and your business will not need every single cover available.

For example, the risk will differ from a typical tradesman job in comparison to a professional writer; one has more risk of the potential of a serious injury, while the latter may face the occasional paper cut.

Here is a list of the different types of commercial insurance cover you can take out:

  • Professional Indemnity Insurance: In an ideal world, the service your company offers leads to happy customers all of the time. However, in the event a customer or client claims there is a fault with a service you delivered, PI insurance protects you from the cost of unexpected mistakes, covering any legal fees and compensation expenses.
  • Public liability insurance: This protects you against any claims where someone feels they have been injured or their property has been damaged as a result of your business activities, such as a fitness centre involving an indoor rock climbing injury. Although it’s not a legal requirement, it does ensure your finances are not impacted as a result of third-party bodily injury or property damage claims, as all legal and compensation fees are covered through this policy.
  • Employers’ liability insurance: If one of your employees suffers an illness or injury due to work, this cover protects you from employment disputes. It is a legal requirement in the UK, whether you have just one employee working for you, or one hundred. It also includes volunteers, people working on a casual basis and even friends who lend a helping hand over the weekend.
  • Personal accident insurance: This cover protects your business from any financial loss if you or a member of your team is unable to work over a period of two weeks or longer due to an accidental injury. It helps lessen the impact of a key employee who is absent for an extended period of time.
  • Commercial Building insurance: This type of cover is especially beneficial if you own the building your business operates from. It protects your building from any unexpected damages, such as floods or fires. However, do bear in mind that it only protects the building itself, not the equipment within or contents of the building.
  • Tools insurance: This policy covers industry-specific tools, making it an important policy for tradespeople that rely on their tools day to day and cannot get the job done without them. Businesses that could benefit from this type of cover include handymen, carpenters and electricians
  • Business equipment and office contents insurance: Regardless of the size of your company, every business with an office space benefits from this particular policy as it covers all the essential equipment you need day to day. This includes computers, desks, photocopiers, printers and other tools along these lines. With this insurance policy in place, you can get the replacement you need quickly, making sure you are able to continue business as usual.
  • Crime insurance: This cover protects your company from any type of crime, such as theft, damages to the property or fraud, and is an essential way to protect your business from any unforeseen circumstances.
  • Cyber and data insurance: As the times change, so do the types of crimes businesses fall victim to. With an increased reliance on technology, cyber insurance has come to the rescue to protect your business from any online risks, such as data breaches and being hacked. This is especially essential if your company handles sensitive client data.

How Much Does Commercial Insurance Cost?

The cost of your policy depends on various factors specific to your company, such as the size of your business and how much risk your company faces, as you will pay for more insurance if your business is likely to encounter more risks. Therefore, companies with more employees, larger offices and more clients do pay for more insurance coverage, whereas a smaller, home-based business will benefit from less cover.

How Can I Reduce My Commercial Insurance Costs?

To lower your costs, you can manage your risks and implement regular risk management assessments within your company. A few examples of managing your day-to-day risks could be anything from installing security cameras, avoiding exposure to error by effectively communicating with clients and perhaps having meeting notes, and mopping the floor when it is wet outside to reduce the risk of someone slipping and falling.

Another way you could reduce insurance fees is by consulting with an independent agent specialising in commercial insurance, as they can not only advise you on what policies will benefit you the most to effectively protect your business, but also guide you on how to lower your threat of risks.

Lastly, working with a free insurance broker is a great way to ensure you are getting the most varied insurance prices and options to ensure that the commercial insurance policy you go for really can benefit you and the risks specific to your business.

How Do I Get Commercial Insurance?

When starting the process of getting commercial insurance, the first and most essential step is to do a risk assessment.

You need to have a clear idea of what kinds of accidents, natural disasters or lawsuits could damage your business and be aware of the threats your company may face in order to have a clear idea of what cover is essential to your business.

Next, find an insurance broker. Even if you have read every single article on Google and are somewhat of a commercial insurance expert, everyone can benefit from the input of a professional. Insurance brokers are independent entities, who are regulated by the Financial Conduct Authority.

They assist you in finding the best insurance from a range of options and act as the middleman between you and the insurance provider.

Comparison websites offer information and quotes that may be too generalised, whereas working with an insurance broker means you can draw on their expertise to find you the right insurance deal, and ensure you have included policies that are specific to your situation and business.

How Do I Get the Best Commercial Insurance?

Insurance brokers are a wonderful way to make your commercial insurance process a quick and easy one. Finding the right commercial insurance can be complex, so it is useful to speak to an insurance broker as they draw on their expert knowledge to find you the best possible deals specific to your business.

For example, if you own a mobile bicycle servicing business, which experiences an increase of online bookings over the summer, an insurance broker will recognise the need for cyber and data insurance to be included in your policy.

Insurance brokers also use their existing relationships with insurance providers to access various insurance deals which sometimes may not be advertised to customers, ensuring they find you the best deal.

While insurance agents work for a specific company and can find you the best deals from that provider, insurance brokers represent you. As they are not tied to a company, insurance brokers are dedicated to finding insurance that works for you.

It is in their best interest to find you the perfect deal as insurance brokers make their money through a small commission from the insurance provider you decide to work with – which means they are free to use, as you do not have to pay them for their services.

While you cannot predict the future, you can be prepared for it. When in doubt, turn to the handy commercial insurance guide above so you know where to start when taking the steps to ensure your company is successful and protected.