Reasons to Buy Commercial Insurance

Adequate commercial insurance can save you serious headaches down the road.

Commercial insurance, commonly known as business insurance, is the segment of the insurance market intended for use by business owners. Businesses use a variety of commercial insurance products to transfer some of the greatest financial risks of their operations to an insurer. Property damage and personal and professional liability are two broad types of business insurance most business owners acquire.

Protect Your Property

Business owners need to protect their investment in the property just as homeowners do. This includes getting commercial property protection that includes replacement cost if the property is a loss following a natural disaster. It also includes damage protection if the building is damaged by vandalism or a natural disaster. Just as your home is your most important personal investment, a building is a major investment for you and your business.

Obtain a Loan

Lenders typically require that you carry building insurance when you use financing to buy a home or other type of building. This protects their investment when offering funds secured by the property as collateral. While lenders usually require protection just for the replacement value and for damage done to the building, many business owners find that this is not broad enough protection to cover their risks in doing business.

Transfer Risk

The general reason anyone buys an insurance product is to transfer the risk of financial loss to an insurer in exchange for regular premium payments. This is especially imperative for business owners who are at risk of substantial financial losses due to property and asset loss or liability. When a building is damaged, most small business owners cannot afford to rebuild or repair major damage. Liability protection, which includes general, product and professional liability products, covers you when you are sued by someone injured or who has suffered damage in the course of business.

Meet Legal Requirements

Liability protection is not only sound financial wisdom, it is also legally required in some states. Certain businesses are required to carry adequate professional liability protection to make sure they can cover lawsuits for malpractice, errors or negligence. If you are entering a high-risk profession, such as the medical field, your state government may require that you carry liability protection.

References

• Compuquotes: Insurance Definition -- Commercial Lines
• Business.gov: Types of Business Insurance