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What is the difference between commercial property and liability insurance

Jun 17, 2023 · 6 minutes to read

You may wonder what the difference is between liability insurance and commercial property insurance if you are a new business owner.

The term “liability insurance”, if you don’t work in the insurance industry, sounds vague.

This guide was created to help you better understand the differences and similarities between these two types of coverage.

What is the difference between Commercial Property & Liability Insurance?

Commercial Property Insurance protects the brick-and-mortar structures and physical items you need to run your business. This insurance will cover any damage to your property.

Liability Insurance is used as a general term to describe insurance for businesses that protects you against financial losses, damages, or injuries caused by your business.

Shortly, commercial property insurance helps cover the assets of your business. Liability insurance will cover your expenses if an accident occurs with people that you interact with, excluding employees.

What is Commercial Property Insurance?

Commercial property insurance can help you cover repair and replacement costs if something happens to your property.

Fire, water damage, and theft are all covered. Be sure to carefully read the policy documents so that you understand what is covered and what is not.

What is covered by Commercial Property Insurance?

Four types of commercial property insurance are available:

Inventory, equipment, and gear: Coverage for the inventory, furniture, and equipment you need to operate your business. This is also called Business Personal Property Insurance or BPP.

Buildings: Commercial Property Insurance can pay for repairs on a building you own and use to conduct business. If you rent or lease a space, this coverage is not necessary.

Business Income Interruptions: Coverage for temporary shutdowns of your business caused by covered events, such as fire or water damage. Business Income Insurance helps replace lost income and covers operating costs like utility bills and payroll. It can also cover costs for relocation or new equipment.

Equipment breakdowns: This policy provides financial protection in the event of a mechanical or power surge failure that affects your equipment.

Who Needs Commercial Property Insurance?

Business owners often rely on their equipment, furniture, or inventory to run their business. Commercial property insurance in NJ protects all these assets.

Commercial property insurance can protect your business if any of the following apply to you:

  • I own or lease a physical space where I conduct my business (office, shop, home, etc.).
  • My equipment or inventory could be stolen or damaged
  • If certain property is damaged or destroyed, I will have to close my business.

Here are some examples of how commercial property coverage protects small businesses:

  • The inventory is stolen from an electronic store. The cost to replace it is covered by commercial property insurance.
  • An electrical surge causes a bakery to malfunction. The commercial property coverage pays for the repairs.
  • A storm causes a tree to fall, damaging the roof of a property office. The repairs are covered by commercial property insurance.
  • Water extensively damages a salon due to a pipe burst. Insurance for commercial property can help fix the damage, and cover any temporary relocation costs.

How much does Commercial Property Insurance cost?

Insurance companies usually take into consideration the following factors when calculating commercial property insurance rates:

  • The type of work you do
  • Your business location
  • The coverage you want
  • Your claim history
  • How long have you been in business?

What is liability insurance?

Liability insurance can be used to describe a variety of types of insurance for businesses that cover losses, damages, or injuries caused by your business.

Liability insurance is also known as General Liability (slip-and-fall) or professional insurance which protects against lawsuits that involve business disputes.

What is covered by Liability Insurance?

Liability insurance comes in different forms. There are different types of liability insurance. Each covers different kinds of accidents that you might encounter at work.

Who Needs Liability Insurance?

Liability insurance is a necessity for almost all businesses. The most common type of liability protection is general liability insurance, but many companies have multiple types of coverage to ensure comprehensive coverage.

Here are a few ways that liability insurance can protect small businesses:

  • A client has an allergic reaction to a product used by a stylist at the salon. Medical expenses and legal fees can be covered by general liability insurance.
  • An accountant mistakes on a tax form, resulting in penalties. Professional liability insurance may cover financial damages caused by the accountant.
  • Food poisoning is caused by expired snacks bought at a convenience shop. Product liability insurance can cover any lawsuits that result.
  • Intoxicated customers in a restaurant stumble and knock another customer down, causing injury. Liquor liability insurance can cover their medical costs.

How much does Liability Insurance cost?

Different types of liability insurance have different costs. Below are the lowest monthly premiums for some of the most popular types of liability insurance:

  • General Liability Insurance costs as low as $11 per month
  • Professional Liability Insurance costs as low as $18.34 per month
  • Commercial Auto Insurance costs as low as $12.50 per month

The exact cost of each liability insurance depends on several factors such as your work and the location of your business.

What is the similarity between Commercial Property Insurance and Liability Insurance?

Liability insurance protects your business against unforeseen events that could cause significant financial damage. Depending on the situation, your clients may ask you to provide proof of liability insurance or commercial property coverage before they do business with them.

These two insurances do not overlap in terms of coverage. Both types of insurance cover different business scenarios and accidents.

Commercial Property and Liability Insurance Policies are always separate.

Commercial property and liability insurance are sometimes combined in what’s known as a Business Owner’s Policy, or BOP Insurance.

This policy provides the same benefits as property insurance but also includes protections under general liability insurance for injuries to non-employees and damage to property that does not belong to you.

Do I require both types of insurance coverage?

The type of work you do will determine if you require commercial property and liability insurance.

General liability insurance is purchased by many businesses to cover the common risks they face. The type of liability coverage you need will depend on your industry.

Commercial property insurance is a great option for any business with inventory, equipment, or a brick-and-mortar location.

Commercial Property Coverage without Liability Insurance

If you prefer, you may only purchase a policy for commercial property. However, liability coverage is recommended for all businesses.

How BizInsure can help small businesses get covered

It is important to protect your small business with the right insurance coverage. We make it simple to customize affordable business insurance that meets your needs.

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