two business men overlooking a document explaining the difference between business and commercial liability

Business vs. Commercial Liability: What's the Difference?

Business and commercial liability insurance have often been used interchangeably, but you may be surprised to learn that these are two different types of policies. Many people get confused with these two kinds of insurance, but these major differences set them apart.  

General Liability

Commercial liability insurance is a standard policy issued to businesses and organizations to help defend against claims for bodily injury and property damage on the premises. Policies for commercial liability can vary quite a bit, as can the price. You can request add-ons that could increase the cost of your monthly premium but also provides extra assurance.

Business liability insurance policies provide more than just general liability. The amount of coverage for business liability can be different for every profession. A company that is considered "hazardous" may need more coverage than just bodily injury, property damage, and products-completed operations liability protection. 

Extra Coverage

As mentioned before, business insurance has the extra coverage that company owners may need. Some businesses may consider commercial insurance lacking since it only provides a policy for bodily injury and property damage. The general opinion is that commercial liability insurance is a general policy that reaches the bare minimum, but some business owners want more. 

Business liability insurance offers a wider array of protection against damages including reasonable use of force, borrowed equipment, non-owned vehicles, legal defense costs, advertising injury such as slander or libel, and medical payments. 

One of the most valuable additions to business liability insurance is coverage for fire, lightning, and explosion damage. This would provide payouts that are often considered “acts of God.” Some policies may also include water liability, but this can vary based on the business location and insurance company provider. Areas that are prone to flooding may not have the ability to get water liability insurance. 

Business Owner’s Policy

Commercial liability and business liability insurance may become even more difficult to tell apart when agents mention business owner’s policy. Business owner’s policy insurance is very different from the two previous forms because it’s only eligible to small companies. Commercial liability insurance and business liability insurance is available to anyone, although the price can often seem unreasonable. 

The reason some people may choose a business owner’s policy over commercial and business liability is that it’s a cheaper option. A business liability insurance policy can cost as much as $15,000 per year for an occupation that’s considered hazardous. Some small business owners may not be able to pay this amount, so they opt for cheaper insurance that covers less—a business owner’s policy. 

Keep in mind that if you choose a cheaper insurance that offers less coverage, you may be responsible if someone sues you due to an injury. For example, if you have $30,000 policy limit and someone sues for medical bills and legal costs that are $50,000, your company is responsible for the additional $20,000. So, it could be worth it for your business to pay more for a more thorough insurance plan.

Last Updated: December 18, 2018