Commercial or business insurance is defined as an insurance policy that offers different types of coverage to protect the business, business owners, and employees.
It is vital to note at this juncture that there is no “one size fits all” business insurance policy. Most policies include the following elements: commercial vehicle insurance, property and building insurance, as well as general liability and crime insurance.
Optional extras include business interruption insurance, workers’ compensation insurance, and equipment breakdown insurance.
Therefore, the question that must be asked and answered is, how do you choose which of these elements to ensure your company against?
By way of answering this question, let’s consider each aspect individually.
Business interruption insurance
It is interesting to note that the sub-category, business interruption insurance, would payout during the COVID-19 pandemic as it, by definition, is “insurance coverage that replaces business income lost in a disaster.” The global COVID-19 pandemic is the quintessential definition of a disaster.
Thus, it is probably a good idea to consider taking out business interruption insurance to mitigate the risk of future natural disasters like those caused by climate change and global warming.
Wikipedia.com defines workers’ compensation insurance is an insurance type that provides wage replacement as well as the cost of medical bills for employees injured while at work. If the injured employee claims from the employer’s workers’ compensation insurance, (s)he relinquishes the right to pursue a personal injury claim against the employer.
Equipment breakdown insurance
Manufacturing concerns that rely on the continual and faultless operation of heavy (and light) machinery to manufacture products could end up losing a substantial amount of money if any part of the production line breaks down.
A good example of this scenario is a vehicle manufacturer. Statistics from statista.com show that circa 16.8 million motor vehicles were manufactured in the USA in 2019. This number translates into about 1.4 million cars a month and 35 000 cars per week. Each new car costs on average $40 000. Therefore, the average calculated weekly income on new motor vehicles is about $40 million a week. If every motor vehicle company’s production line had to go down for a week, it would cost the motor vehicle industry $40 000 for the week’s downtime.
Thus, based on this case study, it makes sense to take out equipment breakdown insurance to mitigate the losses incurred as a result of a break down in the motor vehicle production line.
Commercial property insurance
Commercial property insurance is the foundation or base of any business insurance policy. It covers the commercial property, including the buildings, grounds, and equipment, from the risk of catastrophes like fire, theft, and natural disasters.
Because this insurance is required to cover the repair or replacement cost of the commercial property and equipment that is valued at billions of dollars, it’s vital to choose the type of coverage that fits the company’s requirements. Otherwise, it will cost the business monies that could be better utilized.