What is Business Insurance?

Businesses in Massachusetts are inherently exposed to at least some potential risks. Not all businesses face the same set of risks, but there are few commercial or industrial operations that have no risk associated with them. Business insurance policies help businesses protect themselves from many of the risks they face.

In the insurance industry, the terms “business insurance” and “commercial insurance” are often used interchangeably. Both terms are used to distinguish insurance policies that are written for businesses from those that are designed for individuals.

What Massachusetts Businesses Need Commercial Insurance Policies?

The majority of businesses in Massachusetts need at least some insurance. As mentioned, few (if any) businesses are free from risk, and many of the risks that businesses face can be financially devastating. Without adequate coverage, a single incident could leave a business financially devastated and possibly, even force it into bankruptcy.

Moreover, businesses usually need insurance regardless of their size and structure. Large businesses may be exposed to more risks than small businesses, but even one-person businesses typically have some risks associated with them. S corporations, limited liability companies and sole proprietorships provide varying levels of legal protection, but they don’t normally offer all the protections a business needs. Being small or having a legal structure in place isn’t a substitute for getting the right insurance.

What Commercial Policies Do Insurers Offer?

Because businesses are exposed to a wide array of risks, insurers offer a lot of commercial policies. These range from the broad (e.g. commercial liability insurance) to the highly specific (e.g. builders risk insurance). Some common types of commercial insurance that businesses frequently get are:

• General Liability Insurance, which may cover certain types of common liability lawsuits
• Commercial Auto Insurance, which may cover company-owned vehicles
• Commercial Property Insurance, which may cover buildings that a business owns
• Workers Compensation Insurance, which may cover employee injuries and illnesses
• Product Liability Insurance, which may cover incidents involving a business’ products

What Are Business Owners Policies and Commercial Package Policies?

Businesses often bundle the individual insurance policies into either a business owners policy or a commercial package policy. Both of these are package policies designed to meet the insurance needs of businesses that need multiple coverages.

Business owners policies are generally designed to meet the insurance needs of small and medium businesses that require only common coverages. These policies typically include general liability, commercial property and business interruption insurance, and some have a few additional policies available.

Commercial property policies are normally used to insure larger businesses and those with unique risk exposures. These policies frequently have many available coverages (often including both those found in business owners policies and others). Businesses can typically pick and choose from the available coverages to create a package policy that’s tailored to their particular needs.

Are Commercial Policies’ Premiums Tax-Deductible?

Premiums paid for commercial policies are normally tax-deductible as long as the coverage is used only for a business. In the few cases where a policy is used for both personal and business coverage, the policy’s premiums may not be fully tax deductible.

While this is generally true, business owners should contact a tax professional before deducting the premiums their businesses pay. Tax laws can change, and they must be applied to a business’ specific situation.

How Can Businesses in Massachusetts Get Business Insurance?

For help finding the policies their Massachusetts businesses need, business owners should talk with a commercial insurance specialist from Flavin and Flavin Insurance. An independent agent will be able to recommend policies regardless of what insurer offers them, and an agent who’s familiar with business insurance policies will know what coverages are appropriate for a particular business.