As a business owner, it is essential to understand how commercial insurance works. Commercial insurance is the umbrella term used for insurance policies that are designed to cover all businesses, big and small.
1. Commercial Insurance Covers Multiple Types of Coverage
Commercial insurance is an overarching term that is used to refer to insurance that businesses purchase. Commercial insurance policies include different types of coverage. One of the most common types of commercial insurance is general liability insurance that protects you against liability lawsuits that could occur due to a wide range of circumstances related to your business.
Next is property insurance, which can be used to protect a physical piece of land that is associated with your business, building, or equipment. Then there is commercial auto insurance, which covers the insurance side of any vehicle being used for business. Finally, umbrella insurance can combine the three policies above, or more nuanced coverage, into one policy.
These are just the four most common types of commercial coverage; there are also more specific types of business insurance related to one's employees and specific industries.
2. There Are Various Legal Requirements Surrounding Commercial Insurance
The legal requirements to carry commercial insurance vary based on where you live, licensing requirements, and what profession you are operating in. You may also have contracts, such as a lease for a building, that require you to carry specific insurance types.
As the legal requirement to carry insurance can vary so much based on the location and type of the business, it is best to discuss this with a commercial insurance agent. In general, outside of legal requirements, it is generally smart to at least carry a liability policy to protect your business from lawsuits.
3. Commercial Insurance Is a Business Expense
Finally, commercial insurance is considered a deductible business expense in certain situations when it comes to doing your taxes. It can be deducted if it covers your business operations. However, it cannot be deductible if your insurance only covers something like the loss of earnings. Check with your accountant to determine if your commercial insurance is something that you can deduct as a business expense on your taxes.
Commercial insurance generally refers to property insurance, liability insurance, auto insurance, and umbrella policies. It is always smart to carry liability insurance; the legal requirement to carry commercial insurance varies based on location and industry. Finally, you may be able to deduct some or all the cost of your commercial insurance as a business expense on your taxes.
Talk to a commercial insurance agency to learn more.