Does general liability insurance cover theft?

General liability insurance covers common business liability risks, such as a customer’s bodily injury at your business, and the associated medical bills. It also covers damage to a customer's personal property, advertising injury, and copyright infringement.

It protects your small business from the high costs of lawsuits and helps you qualify for leases and contracts. A business with high foot traffic, such as a retail store, could use this coverage. Anyone who spends time on other people’s property, such as those in the building trades, could also benefit.

However, it does not protect against the theft of your personal business property. For this protection, you would need commercial property coverage. Commercial property insurance covers claims filed by your business with the insurance company for a financial loss, such as the damage or theft of your business property. It’s often required to sign a lease.

You may need commercial property coverage and additional policies to cover your risk exposures and to fully insure your business against burglaries and theft.

Among small business retailers, 56 percent reported theft in 2022, according to a survey by the U.S. Chamber of Commerce. The survey reveals that 53 percent of small business owners say the problem is getting worse.

Professional servicing firms (consulting, financial services, insurance, etc.) are also a target for theft. The survey revealed that 45 percent of small professional service firms experienced theft in the previous year, with 42 percent experiencing more theft than the year before.

The National Retail Federation’s 2023 Retail Security Survey reveals that organized retail theft is a particular concern, where large groups of thieves swarm a retail business and run off with armloads of merchandise. According to the survey, 81 percent of respondents said organized retail offenders have become more violent over the previous year.

Shrinkage, or the loss of inventory, was 1.6 percent in 2022, an increase from 1.2 percent in 2021. The survey lists the source of these losses as:

• External theft: 36 percent.
• Internal (employee) theft: 29 percent.
• Process, control features, and errors: 27 percent.

The right security investments can reduce the chance of a theft or burglary at your business. They can also help protect yourself and your employees from physical harm. Here are seven ways you can protect your small business from burglaries and theft:

A security alarm can protect your business from fire and theft. It might also get you a lower premium on your commercial property insurance. It’s a good idea to post signs warning criminals that you have an alarm system, as this can reduce the chance of an attempted break-in.

You may want a security system that can be controlled and monitored remotely through your smart phone, tablet, or computer, so you’ll be aware of any threats to your business when you’re not there.

A security alarm can protect your business from fire and theft. It might also get you a lower premium on your commercial property insurance. It’s a good idea to post signs warning criminals that you have an alarm system, as this can reduce the chance of an attempted break-in.

You may want a security system that can be controlled and monitored remotely through your smart phone, tablet, or computer, so you’ll be aware of any threats to your business when you’re not there.

Your most valuable items ought to be secured in locked cases behind Plexiglas, where customers can still see the merchandise. You might also consider keeping a limited number of highly-sought items on the shelf. Many retailers also use employee cages, made of wire mesh or Plexiglass, especially if they’re in a high crime area or have a high amount of foot traffic.

With a lockbox, any payments to your business are sent to a post office box that your bank has access to. Your bank collects these payments on a regular basis and credits them to your accounts. If your business receives large denomination checks and other payments, a lockbox can reduce the chance of thieves getting their hands on them.

Any employees or contractors working for your business should undergo a full background check, especially if they’ll be handling cash, payments to your business, and any sensitive information about your customers and your business.

Make sure the entry points to your business and vehicles are secure. Your windows and doors should have secure locks, and you should make sure that you and your employees check them on a regular basis. You should also survey your business grounds, looking for weak points of entry and places where a criminal could hide.

Motion-detection lights can eliminate any shadows and offer an alert to any movement on your property. You also need to secure all the keys to your business and its vehicles, limit those who have access to them, and by all means don’t leave any keys in your vehicles.

Your employees are often your first line of defense against theft, so make sure they’re fully trained to help you reduce your risks. Such threats include retail theft, ransomware schemes, and data breaches.

Employee training is especially important in a retail setting, where there’s also a threat of violence. Make sure you train your employees in how to look for signs of potential theft and how to deal with suspicious customers without provoking them. There are courses available online that can teach them the best methods for stopping theft while avoiding violent situations.

You could hire a team of security guards yourself, or through a business that provides them as a service. The advantage of using a security company is they can handle the training, background checks, and insurance for the people they provide to your business. The security company would also be responsible for complying with state and local laws that regulate their profession.

If you do hire security guards, either on your own or through a service, check with your own insurance provider to see what your own liability protections are and if you need to increase your liability coverage limits.

The right insurance coverage can financially insulate your business against the costs of burglary and theft. Because each policy covers different types of risks, you may need more than one type of business insurance policy to fully protect your bottom line.

Commercial property insurance: This is also known as "business hazard insurance." It covers your business’s physical location, business supplies, and equipment in case it’s lost, stolen, or damaged from things like fire and vandalism. Commercial landlords typically require this to sign a lease and may ask to see your proof of insurance from your insurance company.

Business owner's policy: A BOP bundles your general liability insurance coverage and commercial property insurance at a discount. It protects against the most common third-party lawsuits and property damage claims.

Inland marine insurance: Covers your business property, such as products, tools, and equipment, while it’s in transit over land or stored at an off-site location.

Commercial crime insurance: This policy, also known as fidelity insurance, offers protection from employee theft or fraud that impacts a client. It covers both first-party liability (employee theft against your own business) and third-party liability (employee theft against one of your customers).

You can also obtain first-party coverage as an additional endorsement to your commercial property coverage or a BOP, whereas third-party coverage could be obtained through a fidelity bond.

While the above policies cover claims against your business property, such as buildings and inventories, you may have other business assets that need these types of coverage against liability claims and theft:

Cyber insurance: Also known as cyber liability insurance, this policy insures against the costs of data breaches and cyberattacks, such as a hacker stealing the personal data and credit card numbers of your customers. It covers things like customer notification, credit monitoring, legal fees, and fines.

Commercial auto insurance: This is required in most states for businesses that own vehicles. It covers your legal bills, medical expenses, and property damage if a business vehicle is involved in an accident. If you have comprehensive coverage, your auto insurance policy would also cover the theft of your business vehicles or damage from things like falling tree limbs and vandalism.

Complete Insureon’s easy online application today to compare insurance quotes from top-rated U.S. carriers. You can also consult with a licensed insurance agent on your business insurance needs. Once you find the right policies for your small business, you can begin coverage in less than 24 hours.