Personal Lines
Personal lines insurance covers individuals against loss resulting from death, injury, or loss of property. Personal lines insurance makes it possible to do things such as driving a car and owning a home without risking financial ruin. Coverage generally depends on how much an individual is willing to pay in premiums.
- Personal lines insurance covers individuals against loss resulting from death, injury, or loss of property
- Personal lines insurance makes it possible to do things such as driving a car and owning a home without risking financial ruin
- Coverage generally depends on how much an individual is willing to pay in premiums
- In some situations, individuals may not be able to purchase insurance because they pose too great a risk to the insurance company
- Examples of personal lines insurance include homeowners insurance, earthquake insurance, renters insurance, car insurance, life insurance, health insurance, and disability insurance
How Personal Lines Insurance Works
Personal lines insurance is any type of insurance coverage purchased by an individual to cover themselves and/or their families. These policies protect against different kinds of personal risks that would lead to potentially crushing financial losses caused by fire, theft, natural disasters, death, accidents, lawsuits, and illness.
The amount of insurance coverage you can get generally depends on how much you are willing to pay in premiums. The more you are willing to pay, the more insurance you can obtain. Individuals can usually tailor each policy’s coverage and deductibles to strike the right balance between the amount of coverage and the cost of premiums. Premiums can also vary according to where you live.
Personal lines insurance won’t cover every risk an individual might face. However, it can dramatically reduce the policyholder’s liability for damages and the dollar amount they might have to pay out of pocket to remedy an unfortunate situation.
How Personal Lines Insurance Works
Personal lines insurance accounts for about 53% of net premiums written in the property and casualty insurance market, while commercial lines insurance accounts for about 47%.
While personal lines insurance covers individuals, commercial lines insurance provides coverage to businesses and other enterprises.Commercial lines insurance helps protect businesses from any losses they may not be able to cover on their own. This kind of insurance not only covers large commercial enterprises but also protects small businesses against risk. Commercial property insurance, commercial auto insurance, casualty insurance, and medical malpractice insurance are all kinds of commercial lines insurance.
It isn’t always easy to determine how much coverage a business may require under a commercial policy. That’s because the needs of corporations—even small businesses—are much more complicated and complex than individuals who seek coverage.
Commercial Lines Insurance
Commercial Lines — insurance lines used to cover commercial risks as opposed to personal lines, which cover personal risks. Examples include commercial general liability (CGL), workers compensation, and commercial property insurance.
- Property casualty insurance can be broken down into two major categories: commercial lines and personal lines
- Commercial lines account for about half of the U.S. property casualty insurance industry and include the many kinds of insurance products designed for businesses
- Risks and hazards covered under commercial lines include, for example, malpractice insurance, professional liability, builder’s risk, crop insurance, and many other industry-specific coverages
While all commercial lines share some similarities, each policy will be tailored for the type of business being covered and the client’s unique needs. Suppose a structural engineering firm needs professional liability insurance. An insurance policy could protect the company against claims of negligence in creating a building’s plans, performing inspections, and supervising construction, as well as against claims of failure to render professional services. The firm could purchase general coverage as well as specific, additional coverage for each project, plus coverage for punitive damages.
Other Considerations
Commercial lines aren’t just for large corporations. Even a small, home-based business might need one or more commercial lines because homeowners insurance provides limited or no insurance for business activities. For example, a home business might need commercial auto insurance for a company-owned delivery vehicle, workers compensation insurance for the employee who drives the vehicle, property insurance to cover business goods stolen from the home or vehicle and liability insurance to protect against claims by any client who claims the business’s product harmed them.
Types of Commercial Lines Insurance
There are several different types of commercial lines insurance, with many policy types tailored to a specific industry or industry-specific hazard. Here are just a few examples:
- Debris Removal Insurance: this insurance covers the cost of removing debris after a catastrophic event, such as a fire burning a building down. Before rebuilding, the remains of the old building must be removed. Property insurance alone typically won’t cover the costs of removing the debris
- Builder’s Risk Insurance: this coverage insures buildings while they are being constructed
- Glass Insurance: glass insurance covers broken windows in a commercial establishment
- Inland Marine Insurance: this covers property in transit and other people’s property on your premises. For example, this insurance would cover fire-damage to customers’ clothing from a fire at a dry cleaning business
- Business Interruption Insurance: this insurance covers lost income and expenses resulting from property damage or loss. For example, if a fire forces you to close your doors for two months, this insurance would reimburse you for salaries, taxes, rents, and net profits that would have been earned during the two-month period
Goods in Transit
Goods in transit refers to merchandise and other types of inventory that have left the shipping dock of the seller, but not yet reached the receiving dock of the buyer. The concept is used to indicate whether the buyer or seller of goods has taken possession, and who is paying for transport. Ideally, either the seller or the buyer should record goods in transit in its accounting records. The rule for doing so is based on the shipping terms associated with the goods, which are noted next.
FOB Destination
If the shipment is designated as freight on board (FOB) destination, ownership transfers to the buyer as soon as the shipment arrives at the buyer.
From a practical perspective, the buyer may not have a procedure in place to record inventory until it arrives at the receiving dock. This causes a problem under FOB shipping point terms, because the shipping entity records the transaction at the point of shipment, and the receiving company does not record receipt until the transaction is recorded at its receiving dock - thus, no one records the inventory while it is in transit from the seller to the buyer.
The delay in recording the receipt of goods by the buyer is not really a problem, as long as the business refrains from also recording the related account payable until such time as it records the related inventory. Otherwise, there will be a mismatch between the asset and related liability.
Marine Insurance
Marine Insurance — a type of insurance designed to provide coverage for the transportation of goods either on the ocean or by land as well as damage to the waterborne instrument of conveyance and to the liability for third parties arising out of the process.
Marine insurance covers the loss or damages of goods on terminals, cargos, and ships on water or land during transit. This damage includes sinking, theft, collision, fires, or other natural causes.
Marine Cargo insurance is a type of insurance policy that covers the loss or damages caused to marine cargo during transit. The protection is offered to the cargo owner along with the cover to the cargo for any loss or damage caused due to delay in the voyage, ship accident or unloading.
Transit Insurance
Transit insurance is a type of insurance policy that covers business goods or personal belongings while they're being moved from one place to another. These policies typically give you coverage from the time it is loaded onto the specified method of conveyance (a truck, for example) until you reach the destination declared on the policy.
The policy is usually restricted to transportation overland (ie. by truck, rail, airplane, or ferry in connection with land transportation) and travel on ocean marine vessels are excluded.
This type of insurance covers property in transportation through all stages of the journey including:
- Packing and unpacking
- Loading or unloading
- Transportation
- Storage of goods during the move
It also covers the damage or loss of the goods while in transit due to mishandling or other forms of damage such as accidents, explosions, impact fires, theft, and malicious damage.
Losses that can be attributed to the shipper such as improper packaging or inherent vice in the property being transported is not covered.
There are different types of transit insurance depending on what role you play in the journey. For example, people who own the goods in transit would get a different type of transit insurance than someone responsible for their actual transportation.
Transit insurance is useful to people who regularly transport goods over large or small distances, especially couriers.
Transit insurance only applies to goods transported over land including automobile, rail, air, or ferries in connection with land transport. As a result, transportation by ocean marine vessels are excluded and require a special type of policy known as ocean marine cargo insurance.
Transit insurance can be purchased by all types of people involved in the journey such as the owner of the goods being transported, or the company hired to transport the goods. There are even trip transit policies that are meant to insure a single trip to be used when moving offices or when ordering in a particularly valuable piece of equipment for your business.
When shipping goods, it is important to check whether the business transporting your goods is well covered. And even if they are well insured, you should also consider getting your own transit insurance policy to avoid any issues as their coverage is outside of your control and may have inadequate limits, be canceled without your knowledge, or they may have breached some warranties (like a locked vehicle warranty) that could invalidate coverage leaving you exposed to heavy financial loss.
The goods covered by transit insurance can be raw materials, manufactured goods, packaging material, or goods owned by someone else. Other than offering the policyholder indemnity from damage or loss, the insurance coverage also covers other related expenses such as incidental storage (ie. if the truck broke down and the goods need to be kept in cold storage nearby before alternate transportation can be arranged to complete the delivery), and alternative accommodation expenses.
The insurance policy contract's details and rates will depend on the type of cargo, the cargo's declared value, the course of the journey, time periods, and the goods' predefined areas of transit.