Selling Agents’ Commission Insurance
What Does Selling Agents’ Commission Insurance Mean?
Selling agents’ commission insurance protects individuals who earn their income from commissions on sales. This type of insurance reimburses selling agents for losses incurred when a company is unable to meet its obligations. Such situations could arise from various circumstances, such as the company’s building burning down, being struck by a tornado, or other unforeseen events.
It sits in the broader category of business insurance coverage that deals with interrupted operations rather than direct property damage.
Insuranceopedia Explains Selling Agents’ Commission Insurance
Selling agents’ commission insurance is activated when a sale has been completed, but an unexpected event occurs before the goods are delivered, causing financial loss. For example, if a salesperson secures a sale of solar panels worth one million dollars, but an earthquake destroys the manufacturing facility, the salesperson may lose their commission. In such cases, this insurance provides financial reimbursement for the lost commission.
The underlying trigger is usually physical damage to the supplier’s property, which is why this coverage is often bought alongside commercial property insurance on the manufacturer side. Agents who sell on commission full-time also tend to carry their own business insurance as an insurance agent or independent contractor, since a single disrupted shipment can wipe out months of earnings.
