Liability Insurance vs. Property Insurance

What is the difference between liability insurance and property insurance?

With so many types of insurance necessary for small businesses, it’s important to understand what each type is. Two of the most common ones are property insurance and liability insurance, and they have very distinct functions.

  • Liability insurance pays for damages or injuries to other people that were the result of your mistakes. This includes civil liability in court or in a settlement.
  • Property insurance covers your business for belongings lost or damaged by a covered hazard, such as a fire or flood.

Every small business should have coverage of both types. Together, they protect you from your own oversights or errors as well as those of others—and of Mother Nature, which can be particularly harsh in South Florida. Insurance keeps you financially afloat so that these setbacks won’t plunge you into debt, bankruptcy, or financial insolvency.

How Does Insurance Protect You From Lawsuits?

Business liability coverage will protect you financially when your business is found legally responsible for someone else’s losses. It could be anything from slip-and-fall lawsuits to a product failure that causes injury. Whatever the particular situation, your liability coverage will take care of the associated expenses, such as:

  • Legal fees
  • Out-of-court settlements
  • Judgments rendered in court
  • Other legal fees

There are many different types of liability coverage, including:

  • General liability, for events such as personal injuries, copyright violations, and so forth
  • Workers’ compensation, which handles costs associated with injuries and illness of workers
  • Errors and omissions coverage, which covers oversights, negligence, and other errors made by your business
  • Employment practices coverage, which relates to issues like discrimination and wrongful termination

Functions of Property Insurance

Property insurance will pay you for replacement or repair of your business assets, such as your buildings, computers, inventory, raw materials, and other assets when such items are damaged or destroyed by covered events.

The most common such events are:

  • Fire
  • Burglary, robbery, and theft
  • Vandalism
  • Severe weather, which could include hurricanes, depending on your coverage.

Consider the costs associated with a flood. You will have immediate cleanup costs plus repairs to the building, replacement of fixtures and equipment, and damaged inventory.

Property coverage can be obtained to cover all these expenses so that you can get your business back on its feet and in operation without a major financial disruption. It can even cover lost income for the sales you lost during the downtime, if you choose to add such coverage.

One of our top agents Candice says: “We represent over 15 commercial property and liability insurance companies to help you get your best rate. These commercial insurance companies include Avatar, Universal of North America, AIG, CHUBB and Lloyd’s of London.” We’ll find you a great rate on the specific coverage you need.

It can be very easy for small business owners to get caught up in product design, marketing, and quality control at the expense of basic business needs.

Both property insurance and liability insurance fall into that category. Any business owner without them is at real risk of seeing all that hard work and creativity lost in an instant.

Don't let that happen. Protect your hard work and your future with adequate insurance.