How commercial insurance works in Texas
Commercial insurance, or business insurance, is insurance that you purchase to protect your business. First of all, most types of commercial insurance are not required by law in Texas. However, no matter the type of business you have, there are a multitude of risks associated with it. As a result, you should purchase commercial insurance. This would protect your hard-earned assets, income, employees, and clients. So check out the guide below to see the main types of coverage.
Commercial General Liability Insurance
This type of commercial insurance policy protects business owners against various claims of liability. These include property damage, bodily injury. They also include personal and advertising injury, for example, slander and false advertising. Firstly, the policy will cover the damage you cause. Moreover, it will cover defense costs if your business is sued as a result of these events.
Commercial general liability insurance includes two types of coverage:
- premises/operations coverage pays for property damage or bodily injury that occurs on the premises of your business or as a result of your business operations.
- products/completed operations coverage pays for property damage or bodily injury that occurs away from your business premises and is caused by your completed work or products.
Commercial Property Insurance
This form of commercial insurance pays to repair or replace your building and business property against damage from covered perils. In particular, these include fire, storm, or other event covered by the policy. Furthermore, this coverage can pay for lost income if your business isn’t able to operate normally. Commercial property insurance policies offer three levels of commercial property coverage:
- Basic form policies, with the least coverage. They pay for damage caused by fire, windstorms, lightning, explosions, hail, smoke, vandalism, aircraft and vehicle collisions, sprinkler leakage, sinkholes, volcanoes, riots and civil commotion.
- Broad form policies. They pay for loss caused by events covered in the basic form. In addition, they cover damage from structural collapses, falling objects, leaking appliances, and weight of ice, sleet, or snow.
- Special form policies, with the most coverage. They pay for damage from all causes of loss, except those specifically mentioned in the policy (called policy exclusions). Most policies exclude damages caused by floods, earth movement, nuclear disaster and war, insects or vermin, wear and tear.
Most commercial property policies don’t cover damage caused by flooding. However, it is still recommended to get your commercial property protected against floods. And even more so, if your business is located in certain parts of Texas. To achieve this, you’ll need to buy a separate flood policy. We can help you get flood coverage from the National Flood Insurance Program and from major insurers. Sometimes, a 30-day period applies after you buy a flood policy before the coverage goes into effect. So don’t wait until the next storm to cover your business against floods!
Windstorm and hail coverage on the Gulf Coast
If your business is located on the Texas coast or in Harris County on Galveston Bay, your policy won’t cover wind and hail damage. As a result, to get your business covered against these risks, you will have to buy wind and hail coverage. This coverage is designed for coastal residents and businesses. Moreover, it is sold by the Texas Windstorm Insurance Association (TWIA), through local insurance agencies. That means, through us!
Commercial Insurance vs Business Owner’s Policy
A business owner’s policy is typically a combination of general liability insurance and business property insurance in one policy. Therefore, you can tailor your business owner’s policy by adding extra coverage such as data breach coverage. You should also consider getting a business owner’s policy if your business has a physical location. Moreover, you should get it if your business can be sued. And finally, you should get it if you have business assets that can be damaged or stolen.
Commercial auto insurance
Firstly, this is the one type of commercial insurance that is actually mandatory by Texas law. Texas requires a minimum of $30,000 bodily injury liability per person. It also requires $60,000 bodily injury liability and $25,000 property damage liability per accident. In addition, a commercial auto insurance policy covers for vehicle theft, vandalism, and weather damage. Also, if you use a personal vehicle to drive for work purposes, you can cover it with hired and non-owned auto insurance. This is because personal auto insurance policies typically exclude business use. Finally, you can add hired and non-owned auto insurance to general liability insurance or to a business owner’s policy.
Worker’s compensation insurance
Worker’s compensation insurance in Texas is not mandatory by law for most private employers. But it’s important to have it because it can benefit employees with work-related injuries or illnesses. In fact, it covers costs for medical care, wages from lost work time, as well as death benefits and more. Most policies also cover the cost of employee lawsuits related to a work injury.
Most insurance companies offer coverages you can add to your policy for an extra cost:
- Business interruption coverage pays for lost income if your business can’t operate normally because it was damaged or destroyed.
- Extra expense coverage pays the additional costs to return your business to normal after damage.
- Newly acquired or constructed buildings coverage protects a new building if you add it to your policy. You would typically have to add the new building to the policy within 30 days after you bought it or started construction.
- Valuable papers coverage protects your business records and other valuable records. However, this type of coverage is limited.
- Ordinance or law coverage pays for additional repair or construction costs to meet current building regulations.
- Boiler and machinery coverage offers protection for boilers, compressors, air conditioning units, electric water heaters, steam cookers, and similar machinery.