Lesson 102 - The Different Types of Insurance

Different Types of Property & Liability (Casualty) Insurance

Property and casualty insurance covers a broad range of products that are designed for personal and commercial clients. While the products cover a wide variety of areas, they are all designed to protect the client from financial issues that could come from any kind of damage or injury caused to others.

1. Personal auto insurance

2. Personal homeowners insurance

3. Personal flood protection

4. Personal earthquake insurance

5. Personal umbrella liability insurance

6. Workers' compensation insurance

7. Commercial auto insurance

8. Commercial liability insurance

9. Commercial property insurance

personal lines and commercial lines insurance coverages

We will highlight some key differences between the commercial insurance consumer and the personal lines consumer, and we will discuss the effects this can have on the selling and underwriting processes.

For commercial insurance policies, there are a variety of entity types (sole proprietor, partnership, limited liability corporation, professional limited liability corporation, s-corporation, etc.) that could be listed as the Named Insured. Depending on the ownership structure, there may be multiple Named Insureds on a single policy. Commercial consumers can cover a myriad of different building types - offices, storefronts, warehouses, etc. Contents coverage may cover any number of items, such as inventory, furniture, property of the business’ customers, and/or machinery. Underwriters will consider four different liability exposures: premises, operations, products, and completed operations

On a personal lines policy, the Named Insured will be an individual or a married couple. The agents that service persona lines are typically looking to cover homes and their contents and primarily have only a premises exposure. 

Businesses have many different needs when it comes to auto insurance so it is essential to understand who the drivers are and what the vehicles are used for. While these same concepts apply for personal lines insurance, the variance in vehicles and usage is much greater on an auto insurance policy. Further, there are often additional regulations that apply to commercial risks. Drivers may be required to have special driver’s licenses depending on the size of the vehicles, and hauling certain commodities, such as a mobile health clinic, will require financial filings that will be new to the personal lines agent.

Types of Professional and Commercial Insurance Policies

Loss exposures that arise from a business operation are covered under commercial insurance policies. These are common types of commercial insurance:

Medical Professional Liability, aka Medical Malpractice Insurance, aka Professional Indemnity Insurance, protects the insured associated with wrongful practices resulting in bodily injury, medical expenses and property damage, as well as the cost of defending lawsuits related to such claims.
https://content.naic.org/cipr_topics/topic_medical_malpractice_insurance.htm

Many business organizations purchase a commercial package policy (CPP) or a Business Owners Policy (BOP). Each of these policies combines the needed property, crime, and liability coverages into one policy.

Commercial general liability (CGL) insurance protects the insured against claims alleging that the insured is legally liable for bodily injury to others and for damage to the property of others. For example, a retail store could be responsible if a customer falls on the store’s wet floor and is injured. Also, if a customer is injured by a product that the store sold, the CGL policy would cover the store's legal liability.

Commercial property insurance covers damage to buildings or their contents that results from fire, vandalism, and other causes of loss.

Employment Practices Liability Insurance (EPLI) is liability insurance covering wrongful acts arising from the employment process. such as wrongful termination, discrimination, sexual harassment, and retaliation. In addition, the policies cover claims from a variety of other types of inappropriate workplace conduct, including employment-related: defamation, invasion of privacy, failure to promote, deprivation of a career opportunity, and negligent evaluation. 

Commercial crime insurance protects against theft of contents such as cash registers, computers, inventory, and other business property and of money that could be stolen in a robbery during business hours or in a burglary that occurs after business hours. Crime insurance also can include employee theft coverage for crimes committed by employees (for example, when an employee steals money or inventory from the business).