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What Is Commercial Insurance?

Is it insurance for your . . . commercials? No, not quite. This isn’t insurance that will reimburse you if your TV commercials don’t bring in enough business. (That’s another problem.)

If you’re a business owner, or you’re just about to get your big idea off the ground, you might be wondering, What does commercial insurance mean? Or maybe you have commercial insurance and you’re wondering whether you’re actually protected. Well, you’re in the right place.

Simply put, commercial insurance is the same as business insurance. It protects your company from risks like theft, injuries on the job, lawsuits, health care costs, cyberattacks, disasters and other unexpected events. It can help cover or at least offset some of the costs when bad things happen.

We’ll walk you through the details.

Commercial Insurance vs. Personal Insurance

Types of Commercial Insurance

How Much Does Commercial Insurance Cost?

Commercial Insurance vs. Personal Insurance

Before we get into the nuts and bolts of commercial insurance, let’s go over the differences between commercial insurance and insurance that’s for personal use.

The first difference is that commercial insurance can cover multiple properties, stakeholders and employees—your entire business is protected, not just you.

On the flip side, personal insurance usually only covers an individual or a family.

Another difference is that commercial insurance can have much higher limits of coverage since there’s typically more physical property or people at stake.

Because there’s more to protect, commercial insurance agents are specifically trained to customize policies that align with a company’s unique day-to-day activities. For example, the risks in running a local roller-skating rink are very different from a construction company doing $500 million in annual revenue.

This approach is very different from personal insurance plans, like auto or renters insurance, that generally use a one-size-fits-all method.

Types of Commercial Insurance

Like we mentioned, there’s no such thing as one-size-fits-all commercial insurance. Each type of unique policy, summarized below, covers the specific risks your business might face.

Commercial General Liability

Commercial general liability protects your business in a general way (this is insurance, not rocket science, after all). Think of it as a base layer of protection. It covers things like bodily injury, property damage, legal and medical expenses. So, if someone slips on the ice in front of your store, breaks their ankle and sues you, general liability can help cover those legal costs.

Commercial Auto Insurance

Commercial auto insurance covers any vehicles you use to operate your business. So, if you’re in the cookie distribution business, you’re gonna need those trucks insured to keep the cookies rolling. In some situations, however, a vehicle used for business can stay on a personal auto policy—but it can get tricky so make sure you have a good agent who can get into the details with you.

Commercial Health Insurance

What is commercial health insurance? It’s any kind of health insurance offered by a nongovernmental agency. Ever heard of PPOs and HMOs? (Preferred provider organization and health maintenance organization, if you must know.) These are the two most common forms of health insurance businesses provide their employees. These kinds of medical plans can be beneficial for both the business and the employees. Employers can get discounted rates by bundling a corporate health insurance package, and that discount can be passed down to their team. 

Property Insurance

Property insurance can also be a great piece of your plan. It’s exactly what it sounds like—it protects your physical assets and property. This includes items like tools, inventory in your store, equipment and even furniture. So, if one of your warehouses spontaneously combusts, and you lose all of those widgets you just spent six months producing, it’s more of a blip than a devastating blow.

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Workers’ Compensation

Workers’ compensation protects you when one of your workers gets injured on the job. Like that time Bobby threw out his back at work while carrying heavy boxes then tripped on a banana peel. (Come on, Bobby, be careful!) Workers’ compensation kicks in and will cover medical costs or lost wages due to time off. Many policies will also protect you from getting sued by an employee after an on-the-job accident, but not all. In some states, you’ll need to purchase Employers Liability Insurance in order to get this coverage.

Cyber Liability Insurance

Cyber liability insurance can help offset the damage from data hacks and other cyber threats. Imagine if all your customers’ data, including financial information, was compromised. What would you do? Cyber liability insurance is a great way to fight against these new digital threats.

Crime Insurance

Crime insurance protects against the threat of forgery, fraud and theft, whether it’s from employees or nonemployees. So, when someone smashes the storefront window at your jewelry store and makes off with a $5,000 necklace, there’s insurance for that.

Business Interruption

Business interruption covers longer periods of time when you might not be able to make any money due to unexpected events (2020, anyone?). Business interruption insurance also protects against accidents. Like if a fire destroys one of your buildings and you lose revenue for a month or two.

Business Owners Policy (BOP)

Business owners policy (BOP) insurance is when agents or carriers bundle different kinds of commercial insurance into a package. What comes with this bonus bundle? Well, it depends on your business, but here are some common ones that are often lumped together: general liability, property and crime insurance.

Errors and Omissions (E&O) Insurance

Errors and omissions (E&O) insurance protects your company against claims of inadequate or negligent work. E&O insurance is often included in other professional liability policies. We recommend you consult your insurance agent to learn more details.

How Much Does Commercial Insurance Cost?

So many factors can impact the price of your commercial insurance premium. Things like the kind of business you run, the number of people you employ, where your business is located, how long you’ve been in business, how many claims you’ve filed in the past, your deductible, and the types of threats your business is exposed to—all affect your bottom-line cost.

Because every company is unique, pinpointing cost is nearly impossible. Your best bet is to contact an insurance agent to learn about coverage and cost options for your business.


Get the right coverage to protect your business.

When a RamseyTrusted pro is in your corner, you’ll have peace of mind knowing your business is protected with the right insurance.

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Get Covered!

At the end of the day, you’re probably just wondering about two questions: How much do I need? and, How much does commercial insurance cost?

The best way to get the right commercial insurance coverage for the right price is to get in touch with one of our RamseyTrusted insurance pros who are part of our Endorsed Local Providers (ELP) program. They can assess your unique situation and give you free quotes that will make sure you’re covered for all the things that can go wrong when it comes to operating a business.

Find an ELP in your area today.

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About the author


Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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