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One or Both? Business Liability vs. Commercial Property Insurance

Posted by David Ross on Thu, Jul 07, 2016

Can you get away with business liability or commercial property insurance, or does you business need both? Contact American Insuring Group for all your business insurance needs in Philadelphia, Allentown, Reading, Lancaster, Harrisburg, Pittsburgh, Erie, PA and beyond.Experienced small-business owners know that it’s wise to expect the unexpected. Bad things often happen without warning.

Different insurance policies protect their businesses from surprises in different ways, and it’s important to understand the coverage that is included and the differences between the policies.

Comparing business liability and commercial property insurances is a good place to start! 

Business liability insurance protects you from lawsuits

Anything that your business is legally responsible for is called a liability. When you cause someone a loss, you are legally responsible for replacing the loss, usually with money. And that’s where lawsuits come into play. Business Liability Insurance helps you pay for the cost of lawsuits and other expenses for which you are legally responsible.

For example, let’s say you own a machine shop that mass produces parts for an automobile manufacturer, and one of your parts is recalled because it wasn’t made to specification. What happens now? You’re likely to be sued for your mistake or for negligence, which means you will need to hire lawyers and prepare yourself for the possibility of a lengthy trial. You could amass huge costs.

Since small businesses don't have that kind of money, they invest in business liability policies that offer insurance coverage that includes:

  • Attorney fees
  • Out-of-court settlements
  • Judgments from losing the lawsuit
  • Other court and legal fees

Business liability insurance also helps you deal with the responsibilities you have to the people who come into contact with your business:

  • Employees
  • Customers
  • Suppliers
  • Partners
  • Vendors

Types of commercial liability insurance

It's important for you to know that there are various kinds of business liability insurance that cover different types of lawsuits:

  • General Liability Insurance covers physical injuries, slander, libel, infringement, and property damage lawsuits when someone outside of your business sues you.
  • Workers’ Compensation Insurance covers lawsuits related to injuries and illnesses in the workplace.
  • Professional Liability Insurance, sometimes called Errors and Omissions Insurance, covers lawsuits related to your work. It typically pays for your legal expenses when a client claims your work was negligent.
  • Employment Practices Liability Insurance covers lawsuits arising from wrongful termination, discrimination, or unpaid benefits.

Commercial property insurance protects your company’s physical assets

When you buy commercial property insurance, assets like equipment, computers, supplies, inventory, offices, and other business property are insured against loss or damage. Your insurance will repair or replace property that was damaged by the specific events that are outlined in your policy, which can include:

  • Fire
  • Theft
  • Vandalism
  • Some weather-related damages
  • Explosions

For example, a fire does serious damage to a building that houses tens of thousands of dollars’ worth of your equipment. Much of the equipment is lost and the building itself needs major repairs. You will need to replace furniture and the cleanup costs will be substantial. 

A commercial property insurance policy will cover all of these expenses, and if you add Business Interruption Insurance coverage to the standard policy, you can cover the income you would lose if your business has to shut down when it suffers too much damage to operate normally.


Bottom Line: You need BOTH commercial property and business liability insurance policies!

Small businesses need both business liability and commercial property coverage, because they work together to make sure you have enough money to pay your bills when an incident or loss threatens your business. Either a lawsuit or property damage could wipe out your company’s savings, put you in debt, and require that any new revenue go toward legal bills or repair costs. Meanwhile, your business suffers.

Buy both types of coverage and save! 

The good news is that as a small-business owner, you might qualify for a lower rate if you purchase these two policies together. This insurance bundle, often called a Business Owner's Policy (BOP), offers this discount to qualifying small businesses.


Get help for all your business insurance needs right here

Business-Liability-vs-Commercial-Property-Insurance.jpgTo learn more about business liability and commercial property insurance from our independent agents, contact American Insuring Group online, or call us at (800) 947-1270 or (610) 775-3848.

As independent agents we're free to shop among lots of competing insurance carriers to find the best policy for your needs at the right price. Call or click today to get started!

Tags: Commercial Liability Insurance, Commercial Insurance, Business Insurance, commercial property insurance