What is the difference between business insurance vs commercial insurance? This is a common question as business & commercial insurance are often used interchangeably to refer to insurance that covers a business.
Business Insurance vs Commercial Insurance
New business owners searching for ways to protect their companies may be confused by the difference between business insurance vs commercial insurance. Some insurers use these terms interchangeable, referring to the same type of insurance provided to any type of company, regardless of industry. Other insurers, especially those that offer auto insurance, tend to differentiate between the two terms, with each one referring to slightly different industries.
Adding more to a person's confusion is the existence of two forms of polices, one called "commercial property insurance" and the other called "business liability insurance." For an up-and-coming entrepreneur, the confusion can seem overwhelming.
Business Or Commercial Insurance?
In many cases, these terms are used interchangeably to refer to the category of insurance that covers a company, regardless of size or industry. There are multiple separate policies that companies should consider, depending on the type of operation they are running.
For example, if your company runs a restaurant that also offers delivery, you need commercial auto insurance, commercial property insurance, and business liability insurance. Some insurers offer business/commercial bundles, giving you access to everything you need at once when it comes to business insurance vs commercial insurance.
Business And Commercial Use Relating To Auto Insurance
When it comes to auto insurance, there are slight differences in the way business insurance vs commercial insurance use are treated. Depending on the insurer, this may or may not make a difference in the amount of insurance you pay or the type of coverage you receive. Some agencies do offer slightly different policy terms and cover slightly different elements depending on how the vehicle is primarily used.
Business Use - Business use basically refers to the use of the vehicle in the operation of your company. For example, sales representatives who meet their clients at their offices, and only carry samples with them, use their cars for business use. Business use also extends to driving to various locations as a requirement for the job, something a travelling music teacher or health care provider who offers home visits may do.
Commercial Use - Commercial use refers to any vehicle use for the purposes of transporting a person or goods to a location, or for bring tools and equipment to and from a work site. Delivery drivers, taxi drivers, and repair technicians all use their vehicles for commercial purpose. Commercial auto insurance tailored for this use may extend to cover the items or individuals transported in the vehicle at the time of use.
Commercial Property Insurance
Commercial property insurance covers all the physical assets you company has, including the building, all your equipment, and any inventory stored there. Company owners rely on commercial property insurance to repair or replace items damaged by things like theft, fire, forces of nature, and vandalism. Insurers help cover the cost of replacement while also working with you to find reputable contractors who can help repair physical property.
Business Liability Insurance
While commercial property insurance covers the things your company owns, business liability insurance covers your actual business operations. If you are found to be at fault for any incident that causes bodily injury or property damage, business liability insurance pays for costs. This type of insurance extends to your neighbors, customers, suppliers, vendors, staff members, and partners.
The specific type of liability insurance required depends entirely on the type of business you run. It is a good idea to book an appointment with an insurance agent, so you can review your unique needs, with the goal of finding a policy that is a perfect fit. Keep in mind that there are several subtypes of business liability insurance, so make sure you schedule a time to meet with your agent.
Business Insurance vs Commercial Insurance - The Bottom Line
We hope this article on business insurance vs commercial insurance has been informative. Owners, executive, entrepreneurs, and self-proprietors alike must have a solid understanding of the types of insurance they need to protect their company. When there is no congruency about the use of terms among different insurers, it can get quite confusing for those unfamiliar with the field. For example, knowing when the terms "business" and "commercial" are being used interchangeably and when they carry specific meanings is difficult, but important if you want to be fully informed about the policy you purchase.
You can avoid the confusion by booking a consultation with an insurance agent at the firm of your choice. Agents can explain the terms of the policies they sell in clear and easy to understand terms, helping you find the best one to protect your company.