UPDATED: Mar 13, 2020
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Commercial lines insurance is a type of property and casualty insurance policy offered to businesses. The policy can cover a range of insurance needs for the business, including everything from auto insurance for the company’s fleet of vehicles to workers’ compensation insurance for employees.
Commercial lines insurance is considerably more complex than an ordinary insurance policy. There are many different policies and coverage options bundled into each commercial lines policy. Instead of getting workers’ compensation from one company and auto insurance from another company, a corporation might get all of their insurance needs through a single commercial lines insurance policy.
Making commercial lines insurance even more complicated is that larger corporations might use a combination of commercial lines insurance policies to offer the best value instead of working with a single insurance company. One division of a corporation may be covered by one commercial lines policy, while another division may be covered by another policy.
How Does Commercial Lines Insurance Work?
Commercial lines insurance policies are complex. They can have all types of combinations of benefits and coverage options. The insurance is customized based on the company’s unique insurance needs.
A medical clinic with a single private ambulance, for example, will have different insurance needs than an engineering firm that builds bridges.
Many commercial lines insurance policies include products like commercial auto insurance, workers’ compensation insurance, federal flood insurance, aircraft insurance, medical malpractice insurance, and other insurance products required based on the unique needs of the company.
Prior to selling a commercial lines insurance policy, the insurance company will conduct considerable risk management analysis. Based on this risk management analysis, the company will determine how much premiums will be as well as what is included and excluded.
Once the commercial lines insurance policy is active, it will cover various aspects of the company – including liability coverage for doctors performing surgeries and auto insurance for delivery drivers.
Commercial Lines Insurance Isn’t Just for Large Corporations
Commercial lines insurance isn’t just for big businesses. Smaller businesses – even a small, home-based business – may also require commercial lines insurance.
A home-based business owner might actually be required to buy commercial lines insurance because home insurance excludes coverage for any business activities taking place in the home.
Or, a small business might buy commercial lines insurance to cover multiple aspects of the company, including commercial auto insurance for a single company-owned delivery vehicle, workers compensation insurance to cover the company’s two employees, property insurance to cover any goods stolen from the vehicle or home, and liability insurance to protect against lawsuits from any clients harmed by the company or its employees. Instead of buying individual policies for each of these coverage options, the company buys commercial lines insurance customized to meet its business needs.
Am I Covered By My Employer’s Commercial Lines Insurance?
Employees can be covered by commercial lines insurance in all different types of situations. Typically, employees will be told what type of insurance they have and how it works.
An employee who drives a company car that is covered under a commercial lines policy, for example, will be informed of how the insurance policy works. If you are unsure of how this coverage works, then we recommend contacting your HR department to verify. Generally, you would not reach the insurance company directly unless you are in charge of insurance policy decisions.
Or, if you are working in a clinic, you may be covered by medical malpractice insurance. If you make a mistake that leads to the injury or death of a patient, then you might be protected by medical malpractice insurance.
Engineering firms, meanwhile, will have professional liability insurance. As an engineer working for that company, you should be protected under your firm’s commercial lines insurance. This insurance would protect the company against claims of negligence involving the creation of a building’s plans, performing inspections, supervising construction, and providing other professional services.
Who Sets Up Commercial Lines Insurance?
Different individuals might setup commercial lines insurance based on the structure of the company. Individual employees are not required to set up their own commercial lines insurance coverage.
If the primary purpose of the commercial lines insurance is to insure a fleet of vehicles, then the responsibility might fall to the company’s fleet manager (assuming the company’s fleet of cars is large enough to justify a fleet manager). Some companies may outsource fleet management to a third party. In this case, the third party might arrange all commercial lines insurance needs.
In other companies, various executives may be required to set up commercial lines insurance for their divisions.
Do I Still Need to Pay My Deductible with Commercial Lines Insurance?
You may also be required to pay any excess amount over policy limits or outside of the policy’s coverage. If your medical malpractice lawsuit settlement is $1.1 million, for example, and your employer’s commercial lines coverage only covers $1 million, then you may be required to pay the remaining $100,000 yourself.
All of these obligations will be identified in the contract between you and your employer.
Other Types of Commercial Lines Insurance
The most common types of commercial lines insurance are auto insurance, liability insurance, professional liability insurance, medical malpractice coverage, worker’s compensation insurance, and insurance for floods or other disasters.
However, there are many other types of commercial lines insurance available based on the needs of your business, including:
Inland Marine Insurance: Covers moveable property and other specialized items that standard property insurance cannot cover, including cameras, musical instruments, fine art, solar energy equipment, medical equipment, and catering equipment, among many other types of items.
Business Interruption Insurance: Covers lost income and expenses caused by property damage or losses. If your business floods and has to close down for two months while the property is being repaired, then business interruption insurance will compensate you for any money you would have made during this period and any additional expenses incurred as a result of the interruption.
Debris Removal Insurance: Covers the cost of removing debris after a catastrophic event – like when a building falls down. Property insurance will not typically cover debris removal.
Builder’s Risk Insurance: Covers buildings while they are being constructed.
Glass Insurance: Covers broken windows in a commercial environment.
Which Companies Offer Commercial Lines Insurance?
According to the Insurance Information Institute (III), the top ten largest commercial lines insurance companies in the world include Travelers, Chubb, Liberty Mutual, American International Group (AIG), Zurich Insurance Group, Berkshire Hathaway, CNA Financial Corp, The Hartford Financial Services, Nationwide Mutual Group, and Tokio Marine Group.
None of these companies has a particularly dominant market share. Travelers and Chubb both have a market share of 5.5%, for example, while all other listed companies have market shares between 2.2% and 5.0%.