What's the difference between liability insurance vs. property insurance?

Insureon Staff.
By Insureon Staff
November 14, 2019
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Liability insurance and property insurance provide different types of coverage, and both policies are necessary to protect a small business.
A young woman performing calculations in an office.

There are many kinds of liability insurance. Small businesses need to have different liability policies to cover different types of lawsuits, including:

General liability insurance: Covers physical injuries, slander, libel, infringement, and property damage lawsuits when someone not employed by your business sues you.

Workers' compensation insurance: Covers lawsuits related to workplace injuries and illnesses, but it also includes important protections with employer's liability insurance.

Errors and omissions insurance: Covers lawsuits related to your work, including those arising from mistakes, omissions, and professional negligence. This policy is also known as professional liability or malpractice insurance for some industries.

Employment practices liability insuranceCovers employee lawsuits over discrimination, wrongful termination, and unpaid benefits.

What insurance protects you from lawsuits?

A “liability” is something that your business is legally responsible for. When you are held liable for causing someone a loss, you are responsible for making up the loss. Liability is often determined as the result of a lawsuit or legal judgment. Business liability insurance helps you pay for expenses and costs you are legally responsible for.

Say an advertising agency rolls out a new social media campaign for a local restaurant. What happens if the restaurant’s sales don’t improve? It could sue the advertising firm, claiming it failed to fulfill its professional responsibilities.

The firm must now hire lawyers and work through potentially lengthy court proceedings – the final cost could be huge. Because small businesses don't have that kind of money, they invest in policies that offer liability coverage for:

  • Lawyer's fees
  • Settlements (when you resolve the dispute out of court for a set sum of money)
  • Judgments (the damages a judge orders you to pay when you lose a lawsuit)
  • Miscellaneous court and legal fees
Compare liability insurance quotes from leading carriers for free.

Types of liability insurance

There are many kinds of liability insurance. Small businesses need to have different liability policies to cover different types of lawsuits, including:

General liability insurance: Covers physical injuries, slander, libel, infringement, and property damage lawsuits when someone not employed by your business sues you.

Workers' compensation insurance: Covers lawsuits related to workplace injuries and illnesses, but it also includes important protections with employer's liability insurance.

Errors and omissions insurance: Covers lawsuits related to your work, including those arising from mistakes, omissions, and professional negligence. This policy is also known as professional liability or malpractice insurance for some industries.

Employment practices liability insuranceCovers employee lawsuits over discrimination, wrongful termination, and unpaid benefits.

How does property insurance work?

When you buy property insurance, your insurance company can insure equipment, computers, supplies, inventory, your office space, and other business property against loss or damage.

Property insurance covers damage that results from the specific events outlined in your policy. Common covered events include:

  • Fires
  • Theft
  • Acts of vandalism
  • Some weather events

A property insurance policy covers your expenses up to your policy limit, and some policies provide coverage for income you lose if your business has to shut down after a covered event. This often called business interruption insurance.

As a small business owner, you might qualify for a lower property insurance rate if you purchase a policy together with general liability insurance. This insurance bundle is called a business owner's policy and offers a discount to qualifying small businesses.

Compare quotes from trusted carriers with Insureon

Insureon works with top-rated insurance carriers to help you find the right policies at the best price for your business. Start a free and easy online application today to review options for liability insurance, property insurance, and other important coverages. Our licensed agents are standing by to assist you.

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