Personal and commercial insurance coverage understanding the difference

Personal and Commercial Insurance Coverage: Understanding the Difference

Insurance coverage is designed to protect individuals and companies from unforeseen events that would lead to catastrophic financial loss. However, it is important to know the difference between personal insurance and commercial insurance.

Sometimes insurance is mandated by state or federal laws in order to protect an individual’s property or well-being from hazards caused either by the actions of other people or as the result of conditions in the workplace. The liability insurance you carry on your automobile is a good example of mandated insurance. Other times, as in the case of homeowner’s insurance, the lender requires it as a condition of your mortgage so that they don’t lose their collateral investment.

Whether you purchase it voluntarily, or as the result of a mandate, the basic principle remains the same: You pay a premium in exchange for the guarantee that the insurer will compensate you for certain losses or damages if and when they occur.

Personal Insurance Most people are familiar with personal lines of insurance. Some common forms are: • Homeowner’s insurance.

• Health insurance.

• Renter’s insurance.

• Auto insurance.

• Life insurance.

• Disability insurance.

Mandated insurance uses the premiums of healthy individuals or good drivers to offset losses the company incurs by insuring everyone else. The ACA is unique in that it does not penalize unhealthy people per se; however, older people pay considerably more for the same benefits as younger, ostensibly healthy people.

When insurance is not mandated, insurance companies base the cost of premiums on an assessment of risk. Private insurance companies can decline to cover people who are too risky, or they can put a surcharge on premiums. Life insurance companies, for instance, often charge smokers more than non-smokers.

Fortunately, individuals have some latitude and can control the cost of the insurance they carry by purchasing policies with higher (or lower) deductibles or choosing a la carte services on some policies. An experienced insurance agent can help people evaluate their own risk assessment and choose coverage that is both affordable and comprehensive.

Commercial General Liability (CGL) Insurance Unlike most types of personal insurance, commercial general liability insurance (CGL) protects a business from third party legal suits that threaten a company with the financial loss. CGL insurance protects companies and small business owners from: • Claims of injury.

• Property damage claims.

• Claims of false advertising or fraud.

• Claims of libel or slander.

• Claims of negligence stemming from business activities.

Premises or operations coverages protects businesses in the event that someone files a claim due to an injury or property damage that happens at your place of business. This type of general

liability insurance is for third party claims only. When your employees file an injury claim, they are covered by worker’s compensation insurance.

CGL insurance also covers businesses if individuals file a claim for damages that take place off premises. For instance, general liability insurance will protect your assets if someone becomes injured as the result of riding a bike with a faulty part made in your factory.

Excess liability and umbrella coverage help to give small businesses extra assurance of protection if they are sued on multiple fronts or need to pay damages beyond the limitations of a standard CGL insurance policy.

CGL insurance protects not only the owners of the company but also employees acting in an official capacity. It covers a corporation’s executive officers, stockholders, and directors when they are acting on behalf of the business. In joint ventures and partnerships, it covers the official actions of partners, members, and their spouses.

In short, CGL insurance allows a business to survive its own equivalent of a cancer diagnosis – a lawsuit. And just like some individuals pose a higher risk than others, some companies present higher hazard liability exposure that requires specialized underwriting.

About Grand Mutual Insurance A full-service real estate insurance company, Grand Mutual Insurance offers comprehensive personal and commercial coverage for individuals and companies of all sizes. Their team of independent Los Angeles-based agents combines extensive knowledge of the real estate industry with access to hundreds of insurance carriers, enabling them to ensure the most effective coverage for your home or commercial property at the minimum cost. If you have questions regarding the difference between personal insurance and commercial insurance do not hesitate to contact us today!