When you are a business owner, there are many things to think about when it comes to protecting your company. One of those is insurance. There are different types of insurance for businesses than there are for homeowners. So what's the difference between commercial and residential insurance? Our experts at The Voss Law firm discuss what to keep in mind while selecting the proper insurance policy for your home or business. Here we will break it down for you.
Five Key Differences Between Residential and Commercial
There May be Several Insured Parties
On a residential policy, the named insured are usually a married couple or an individual. On a commercial policy, any number of parties could be listed depending on the ownership structure of the business or property. This can create confusion if a claim is filed, as disputes may arise over who and what was covered under the policy. As a result, it is essential to understand exactly who and what is covered under your commercial insurance policy. Otherwise, you may find yourself facing unexpected costs in the event of a loss.
You can Receive Compensation for Lost Business Income
A residential homeowners insurance policy does not cover lost business income, so if an accident occurs that causes the business to shut down or interrupts work, business interruption coverage can be a lifesaver. To receive compensation under the business interruption coverage, the insured must be able to show the income it was generating both before and after the incident. This coverage can make all the difference in a small business's ability to survive a major setback.
You may Need Different Policies for Multiple Businesses
Insurance policies for businesses typically cover one property, but businesses may operate out of multiple properties. Insurance companies will often cover multiple properties if they have similar uses, but will typically require different policies for each property if their uses differ. For example, a business with an office space and a factory as separate buildings would likely need two separate insurance policies to adequately cover each. Insurance companies consider the type of business being conducted when assessing the risk of insuring a property. Factors such as whether customers or deliveries are made to the property, the value of inventory on site, and the type of equipment used can all affect the insurance policy premium.
Tailor Your Coverage for Specific Risks
While residential insurance policies are relatively standardized, commercial policies can vary widely depending on the specific needs of the business. As a result, businesses must carefully consider their insurance needs before selecting a policy. Some common coverage options for commercial insurance policies include coverage for valuable papers and records reproduction, meeting local ordinance codes when rebuilding, replacement of employees’ personal property, and more. By carefully choosing the right insurance policy, businesses can help to protect themselves from a variety of risks.
Most Commercial Policies are Written by Surplus Line Insurers
Insurance is a critical part of any business operation, yet few policyholders understand the difference between admitted and surplus line insurers. Admitted insurers are licensed by the state in which they do business and must comply with all regulations, including those regarding solvency. They are also backed by a state guarantee fund, which provides protection in the event of insolvency. Surplus line insurers, on the other hand, are not licensed by the state and are not subject to the same regulations. They are also not backed by a state guarantee fund, meaning that policyholders could be left high and dry if the insurer becomes insolvent. Given the risks involved, it is important for buyers of commercial surplus line insurance to proceed with caution and to make sure that they understand what they are getting into.
The Voss Law Firm Insurance Claims Attorneys
Insurance is vital for businesses, as it provides protection against a variety of risks, from natural disasters to liability. Commercial insurance policies are often more complex than residential policies, as they are tailored to the specific needs of each business. If you have commercial insurance, you have the right to hire an attorney to assist you with any claims you need to file. An attorney can help you understand your policy and coverage, and will advocate on your behalf to get the best possible outcome for your claim. Whether you're filing a property damage claim or a liability claim, an experienced attorney can help make sure your rights are protected and you receive the compensation you deserve.
The Voss Law Firm, P.C. has been protecting policyholders’ rights for the past 16 years and, in that time, we’ve recovered billions of dollars in settlements for our clients. Ready to find out what we can do for you? Complete our online contact form or call our office at 888-614-7730 to schedule an appointment for a free initial consultation with a member of our legal team. We work on contingency, so you pay nothing unless we win your case.