As a business owner, protecting your assets is paramount. Two crucial types of insurance coverage are commercial property insurance and commercial liability insurance. Understanding their differences is essential to safeguard your business from potential risks. But what are they, and how do they differ? Below, we explain the basics of these two types of types of commercial insurance. San Diego business owners may need both to protect their businesses.
Commercial Property Insurance: What It Is & What It Covers
Commercial property insurance is insurance that covers your business property and equipment from the risk of disasters, such as fire, theft, vandalism, or natural disasters. This type of insurance can help you replace or repair your damaged or lost property and minimize the disruption to your business operations.
Commercial property insurance covers:
- Your building, whether you own it or rent it
- Your furniture, equipment, tools, inventory, and other business personal property
- Your outdoor signs, fences, landscaping, and other property on your premises
- Your business income if you have to temporarily close or relocate your business due to a covered loss
Commercial property insurance doesn’t cover:
- Property damage caused by floods, earthquakes, or war (you may need separate policies for these perils)
- Property damage caused by intentional acts by you or your employees
- Property damage caused by normal wear and tear or faulty maintenance
- Liability claims against your business for bodily injury or property damage to others (you need commercial liability insurance for that)
Commercial Liability Insurance: What It Is & What It Covers
Commercial liability insurance is insurance that covers your legal responsibility for bodily injury or property damage to others caused by your business activities. This type of insurance can help you pay for medical expenses, legal fees, settlements, and judgments if someone sues you for causing him or her harm.
Commercial liability insurance covers:
- Bodily injury or property damage claims from third parties (such as customers, vendors, or visitors) that occur on your premises or as a result of your operations
- Personal and advertising injury claims from third parties (such as slander, libel, false arrest, invasion of privacy, or copyright infringement) that arise from your advertising or business practices
- Medical payments for minor injuries to third parties that occur on your premises or as a result of your operations, regardless of fault
Commercial liability insurance doesn’t cover:
- Bodily injury or property damage claims from your employees (you need workers’ compensation insurance for that)
- Bodily injury or property damage claims arising from your professional services or advice (you need professional liability insurance for that)
- Bodily injury or property damage claims arising from your products or completed work (you need product liability insurance or completed operations liability insurance for that)
Key Differences between Commercial Property Insurance and Commercial Liability Insurance
While both commercial property insurance and commercial liability insurance are essential for business protection, they differ in terms of coverage and scope. Here are the key distinctions:
- Commercial property insurance primarily covers physical assets and property-related risks
- Commercial liability insurance focuses on legal liabilities and potential lawsuits arising from accidents or negligence
- Commercial property insurance protects against damages to buildings, equipment, inventory, and other physical assets
- Commercial liability insurance safeguards against third-party claims for bodily injury, property damage, and personal injury
- Commercial property insurance provides coverage for repair or replacement costs of damaged assets
- Commercial liability insurance covers legal defense expenses, settlements, and judgments arising from lawsuits
- Commercial property insurance helps businesses recover from property damage and loss of income due to covered perils
- Commercial liability insurance shields businesses from the financial repercussions of third-party claims and potential legal proceedings
Why You May Need Both Types of Insurance
As you can see, commercial property insurance and commercial liability insurance cover different types of risks and losses. Depending on the nature and size of your business, you may need both types of insurance to adequately protect your assets and liabilities.
For example, if you own a retail store, you may need commercial property insurance to cover your building, inventory, and equipment from fire, theft, or vandalism. You may also need commercial liability insurance to cover any lawsuits from customers who slip and fall on your premises or claim your products caused them harm.
Alternatively, if you run a home-based consulting business, you may not need commercial property insurance if your homeowners insurance already covers your home office equipment. However, you may still need commercial liability insurance to cover any lawsuits from clients who claim your advice caused them financial losses.
How to Get Commercial Property Insurance & Commercial Liability Insurance
One way to get both commercial property insurance and commercial liability insurance is to buy a business owner’s policy (BOP). A BOP is a package policy that combines these two types of coverage in one convenient and affordable policy. A BOP may also include other optional coverages that suit your specific business needs.
Another way to get commercial property insurance and commercial liability insurance is to buy them separately as standalone policies. This may give you more flexibility and customization in choosing the limits and deductibles that match your risk profile and budget.
To get the best deal on commercial property insurance and commercial liability insurance, you should shop around and compare quotes from different insurers. You should also work with a licensed and experienced agent who can help you assess your risks and recommend the best coverage options for your business.
Business owners need commercial insurance because operating a business means assuming certain kinds of risk, and the type of commercial insurance needed will vary. For affordable, reliable commercial insurance as well as homeowners, renters, motorcycle, and car insurance, call on the trustworthy professionals at Altra Insurance Services. Reach out to us today at (619) 404-6311 to learn how we can satisfy all your insurance needs.