Common Types of Commercial Insurance Claims & How Coverage Applies
Today, we’re highlighting some of the most common types of commercial insurance claims – and how insurance covers them.
Theft
Many commercial insurance claims involve theft. Retail stores deal with theft frequently, but theft can impact all enterprises.
Employee theft, for example, costs companies millions each year.
How It’s Covered: A standard commercial property insurance policy protects the business’s possessions against theft. Your insurer will compensate you based on the value of the items that were stolen, up to the limits of your policy. To cover high-value items, you may need to add endorsements to your commercial insurance policy.
Business Interruptions
Has an external event caused an interruption to your normal business? You could receive compensation through your commercial policy’s business interruption coverage.
Let’s say a fire damages the kitchen of your restaurant business. You’re unable to conduct business as normal, so your insurance covers the cost of this interruption.
How It’s Covered: If the business was interrupted due to a covered peril (like theft or fire damage), then a standard commercial property insurance policy will provide business interruption coverage as part of the claim.
Fire Damage
Businesses lose billions of dollars’ of property and inventory to fire damage each year. It’s one of the most common types of commercial insurance claims.
Like homeowners insurance, commercial insurance includes fire damage as a standard part of most plans. It’s a foundational part of your commercial insurance plan. As long as the fire was not deliberately set or occurred due to fraud, you should receive compensation through your commercial policy.
How It’s Covered: A standard commercial insurance policy covers the cost of repairing fire damage and replacing possessions after they’re damaged by fire.
Weather Damage
Hail, snow, ice, and wind can cause damage to your business.
Like fire damage, weather damage is covered by virtually all commercial insurance policies. Unless the damage is specifically excluded, your commercial insurance provider should cover the cost of repairing damage after a natural disaster.
Depending on your region, certain disasters may be excluded from your policy. Businesses in coastal parts of the southeastern United States, for example, may need to purchase extra windstorm coverage because of the higher risk of hurricanes. Meanwhile, commercial insurers in California may exclude wildfire or earthquake claims.
How It’s Covered: As long as the weather event was a covered peril (say, a windstorm or snowstorm), a standard commercial insurance policy should cover the cost of repairing or replacing any damage.
Customers Slips & Falls
If you have a business open to the public, then liability insurance is an important part of your commercial insurance policy.
Let’s say a customer slips on a wet surface in your store, for example, and breaks an arm. A standard commercial insurance policy includes general liability insurance, which covers injuries to customers and certain other people on your property (but generally not employees, which are covered in a different way).
How It’s Covered: A standard commercial insurance policy includes general liability insurance. This coverage covers bodily injuries to non-employees – like customers in your store – up to the limits of your policy.
Employee Injuries
Your commercial policy includes liability insurance to cover injuries to customers, but it also includes special coverage for employee injuries.
A commercial policy covers employee injuries via workers compensation insurance. Required in most states, workers compensation insurance covers the cost of missing work after an employee is injured at work.
How It’s Covered: An ordinary commercial insurance policy includes workers compensation insurance. In fact, most states require businesses to carry this coverage. If an employee is injured or falls ill at work, then workers compensation coverage covers medical costs and lost wages incurred by the injured employee.
Auto Accidents
If your business has a vehicle or fleet of vehicles, then your commercial policy may include auto insurance. In fact, many commercial policies include auto coverage even when employees drive their own vehicles.
If an employee is driving a company vehicle and collides with another vehicle, for example, then your commercial insurance policy covers certain costs resulting from the accident. If your employee was at-fault, for example, then your commercial policy covers the cost of repairing the other vehicle along with any injuries that occurred. It could also cover the cost of repairing your company vehicle, regardless of fault.
How It’s Covered: A standard commercial insurance policy can include auto insurance to cover company-owned vehicles and any vehicles driven for work purposes – like your employees’ own vehicles.
Damage to Reputation
Although not as common as the claims above, reputation damage can affect your business and lead to an insurance claim. Roughly 5% of commercial insurance claims per year involve reputation damage.
Although relatively rare, reputation damage insurance claims can be costly. According to Globe Midwest Adjusters International, the average reputation damage insurance claim is worth around $50,000.
Reputation damage insurance claims typically involve slander, libel, or invasions of privacy.
How It’s Covered: Some commercial insurance providers cover damage to reputation automatically. Most policies, however, require you to add reputational risk insurance. Also known as reputation insurance, this coverage covers the loss in sales resulting from a brand-damaging incident.
Product Liability
If you create products for consumers, then you need good product liability coverage.
Product liability coverage protects you from damages caused by your products. If your company’s snow shovel snaps in two while someone is using it and causes the customer to break their arm, for example, then your company’s product liability coverage could cover the cost of the customer’s injuries and other damages.
How It’s Covered: If your company makes products for customers, then you likely already have product liability insurance. Contact your insurer if you’re unsure whether or not you’re carrying product liability insurance.
Final Word
Good commercial insurance can change the fate of your business.
If you don’t have the right coverage, then you could experience a devastating loss with no compensation. If you do have the right coverage, then your insurance protects you from this loss, safeguarding your business.
Contact your insurer to verify you have adequate coverage to protect against unexpected events.
Stephanie is a property insurance claim expert with over 20 years of experience working as an insurance adjuster, expert witness, appraiser and umpire. She is passionate about sharing her expertise, knowledge, tips and training to help both property owners and Public Adjusters in their pursuit of effectively managing claims and recovering the claim settlement they deserve after a loss.
