Commercial casualty insurance is intended as a way for someone to protect his or her business financially in the event it becomes nonoperational in some way. Many companies have some type of property insurance, which means that if a fire or other type of damage occurs to its physical location, then the insurance company provides compensation to help with recovery. This does not, however, provide protection in instances in which no direct property damage occurs but the business cannot operate. Commercial casualty insurance gives companies a way to receive compensation in case of an event that disrupts operation for a company in ways other than physical property damage.
One of the simplest examples of a situation in which commercial casualty insurance could be beneficial is in the case of a company that is on the second floor of a building. If both floors of the structure were damaged in some way, for example a fire, then property insurance would typically pay out compensation for the company on the second floor. In a situation in which only the bottom floor was damaged, however, there would be no grounds for a claim on property insurance for the business on the second floor.
The damage to the ground floor in this instance could be substantial enough to prevent the business on the second floor from continuing to operate. This means that the company on the top floor might lose substantial revenue and potentially go out of business, even though it was subject to no direct damage. Commercial casualty insurance, however, can protect against this type of situation and give a company coverage for instances in which no property damage occurs, yet the company is harmed in some way. This type of insurance is available in a number of different forms, including terrorism coverage and flood insurance that may not be provided by property coverage.
There are also other forms of commercial casualty insurance, such as government liability coverage. Also referred to as “political risk insurance,” this is typically provided for a business that operates at least partially in an area that is politically unstable and in which the business may lose the ability to function due to governmental changes. There are also forms of commercial casualty insurance that can give a company protection in case of cyber-fraud or similar types of activities. If a company’s computer systems are compromised due to malicious hacking or malware, this type of insurance may provide compensation to help that business recover and regain operational status.