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General liability insurance vs. business owner's policy

Both general liability insurance and a business owner's policy provide basic protection for your small business, so which one is right for you? Find out which policy fits best by taking a closer look at their benefits and differences.

What is general liability insurance?

General liability insurance offers blanket protection against common torts that small business owners may face. It kicks in when a third party (anyone who doesn’t work for your business) sues you over:

  • Bodily injuries they suffered on your business premises
  • Property damage you caused while completing work
  • Advertising / personal injuries (slander, libel, using someone’s image without their permission, or copyright infringement)

What does general liability insurance pay for?

When you're sued by a third party, general liability compensates you for attorney's fees, court costs, and settlements or judgments up to your policy limit. Even the most careful business owners could face these claims, which is why this coverage is considered the cornerstone of any business protection plan.

What is a business owner's policy?

A business owner’s policy (BOP) is essentially a general liability insurance policy with added property protectio. It bundles several insurance policies into a single package at a reduced rate. A BOP typically includes:

  • General liability insurance
  • Property insurance, which compensates you for insured business assets that are lost or damaged by fire, theft, or windstorms
  • Business interruption insurance, which reimburses you for lost income when a covered property event forces you to temporarily halt business operations

Who qualifies for a business owner's policy?

Though a BOP is a comprehensive and affordable option, it’s not available to all business owners. To qualify for this coverage, you must:

  • Own a small business (i.e., your premises are small and you have a limited number of employees)
  • Work in a low-risk industry
  • Need no more than 12 months of business interruption coverage
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How are general liability and BOP insurance similar?

There's plenty of common ground between standalone general liability insurance and a BOP.

Both policies offer basic liability protection. A general liability policy and a BOP both protect your small business from premises liability, property damage liability, and advertising liability claims.

Both policies can be customized with endorsements. You can add product liability coverage, commercial auto insurance, or liquor liability insurance to either your general liability or BOP insurance.

Remember, a business owner’s policy includes general liability coverage, so you only need to purchase one of the two policies.

How are general liability and BOP insurance different?

There are also differences between a standalone general liability policy and a BOP:

A BOP can reduce your insurance rates. If you’re looking to save money on small business insurance, a BOP should be the first place you look. You’ll receive multiple types of coverage at a lower rate than you’d pay if you purchased each policy individually.

BOPs are not available to all business owners. A business owner must meet certain criteria to be able to bundle insurance policies. Only low-risk small businesses can purchase a BOP, while almost any business can purchase general liability insurance. For example, if you work in construction, you may not be eligible for a BOP because your industry is considered high risk. You could, however, still purchase a general liability policy to protect your construction business from liability exposures.

Compare quotes for general liability or a BOP

Fill out an online application with Insureon to receive free quotes for general liability insurance and a business owner's policy. You can also contact an agent to find out whether your business qualifies for a cost-saving business owner's policy.

Updated: June 30, 2022
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