A short term insurance policy is a short term insurance policy right? Not exactly. In this blog post we dig a little deeper and work out what the biggest difference is between a personal and commercial lines short term insurance policy.
First things first. A short personal lines policy is taken out to cover the risk of an individual while a commercial lines policy is taken out to cover the risk of a business/enterprise. This is the biggest and most obvious difference (but you could have picked that up simply from the terms – personal & commercial)
So what is the main difference?
Its in risks the respective insurance policies cover. That really is the bottom line.
An individual and a business can have very different risks they need covered.
Under a standard short term personal lines insurance policy you can cover around 11 risks while with a commercial insurance policy your business can cover about 35 risks.
Own a business? Drop me a mail for a full list of risks you can cover
Why so many additional insurance risk sections under a commercial lines policy? Good question.
Its just because the nature of a business generally means its at greater risk than an individual. That additional exposure to risk means the business will require additional insurance. And naturally insurance companies are happy to oblige by providing additional sections of cover under a commercial lines insurance policy.
Let’s have a quick look at a couple of business risks you can insure that an individual wouldn’t face.
1. Contents of the office and equipment
2. Profit losses of the business
3. Dishonesty of employees
4. Transit Of Products
5. Bodily injury of employees, partners or directors 6. Employers Liability
7. Unforeseen, sudden and accidental breakdown of business machinery
8. Deterioration of the business stock
9. Additional exposure of the business vehicles.
Also, for the most part commercial insurance risk is only taken on and priced once the short term insurer has had the opportunity to assess the risk ( which will include completing a risk survey at the business premises).
This isn’t the case when you insure your car and home contents under a personal lines policy. Your policy is quickly risk-rated, a premium is automatically generated and viola your cover is in place. No need for a survey at your home.
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Until next time.
The InsuranceFundi Team