New business owners or business owners to be are often confused by all the different commercial insurance terminology. In simple terms, what is commercial property insurance and commercial liability insurance.

Commercial property insurance is also called business buildings insurance and business property insurance. You don’t necessarily have to own your buildings to require this type of coverage. You could rent your business building or even work from your home and still have your physical assets covered under a commercial property insurance policy.

As examples, when disasters like your business buildings being destroyed by fire, burst water pipes in the winter, signs damaged by storms, your commercial property insurance would step in and pay for all damage to your building and its contents including documents, drawings, furniture and equipment, valuable papers, inventory, landscaping, fence, outdoor signs, and even damage to the property of others.

As you can see, a business property insurance is a sound, solid investment for anyone just starting a new business. In fact, you could say that it is a necessary investment as anyone of many disasters could wipe out your physical plant or building and everything in or around it.

Commercial Liability Insurance protects your business assets when a lawsuit is brought alleging damage to property or injury.

Your General Liability Insurance would pay both your legal costs and the settlement excluding punitive damages for any covered liability claim such as property damage, personal injury, bodily injury or advertising injury.

Punitive damages are not covered by commercial liability insurance because the law considers them punishment for intentional act, however all other expenses resulting from a lawsuit would be covered.

It is important to read the fine print carefully when deciding on either type of commercial insurance policy. If you are new or uneducated about business insurance, you should take the time to fully understand the coverages you need for your particular business.

If you don’t understand insurance lingo, ask your insurance broker or agent for clarification of any terms that you don’t understand. It is part of their job to make sure you understand the policy thoroughly.

Unfortunately, we do live in an extremely litigious society where even a seemingly innocuous mishap could mushroom into a million dollar lawsuit. This lawsuit happy climate demands that business owners have adequate Commercial Property and Commercial Liability Insurance protection.