The Expert Podcast

Commercial lines insurance coverage is extremely important for a business owner, no matter what type of business you have—a small mom-and-pop shop, a work-from-home business, or a large commercial enterprise. You want to make sure you have proper risk protection and coverage so that your business is not vulnerable to a large financial loss that could put you out of business.

These include things like general liability insurance if somebody gets hurt on your premises. Maybe you provide products to clients and want to make sure those products are protected from causing harm. You also want to be protected from lawsuits. If you are a licensed professional like an attorney or real estate agent, you might want to have what's called E&O insurance—errors and omissions insurance—so if you make a mistake, you're covered.

The most common type of insurance being requested this year is cyber liability insurance. Quite frankly, the biggest risk most businesses face today is cyber risk—the risk of their servers being wiped out or ransomware attacks. Hackers could break into your company and delete or lock up all your data. Imagine logging into your system and realizing you couldn't access anything—all your records, accounts receivable, and customer data gone. That data might be the most valuable asset your business has, so having good coverage for those cyber assets is extremely important.

Of course, if you have physical assets like real estate, fixtures, desks, or manufacturing equipment, you want to have coverage for those. If, God forbid, your building catches on fire—even if you don’t own the building—your entire facility could be wiped out. Another important type of coverage to consider is lost income or business interruption insurance. This ensures that if your business is shut down for some period of time while you recover from a fire or a cyber event, you are covered for the income you would have earned during that time.

After you have placed all these coverages, you should also consider a commercial auto policy if you have vehicles in your business. These are usually excluded from standard coverage, so it’s essential to have a specific policy for commercial vehicles.

Once you have all your coverage in place, you may also want to look into a commercial umbrella policy. This provides extra coverage on top of everything else and is very inexpensive for what you get. If you already have $1 million or $2 million in coverage on your business policies, adding an umbrella that provides an extra $5 million or $10 million may only cost you a few hundred dollars a year. Ask your agent or broker about a commercial umbrella policy to see if the additional coverage is worth the minimal cost.

Commercial insurance is extremely important because not only do you depend on it, but so do your customers, employees, vendors, and everyone associated with your business. They rely on you for income, payroll, products, and services. You want to make sure that your business is secure so that all the people who depend on you have nothing to worry about.