General liability insurance is included in a business owner's policy (BOP), a cost-saving bundle designed for low-risk businesses. General liability covers bodily injuries, damage to a customer's property, and advertising injuries. A BOP provides the same coverage, along with commercial property insurance.
General liability insurance protects your small business from third parties who do not work for you. It covers lawsuits involving:
- Bodily injuries on your business premises
- Property damage caused by you or your employees
- Advertising injuries / personal injuries such as slander, libel, using someone’s image without their permission, or copyright infringement
When you face a third-party lawsuit, your general liability insurance helps you pay for defense costs, settlements, or judgments, up to your policy limit. Even a frivolous lawsuit can be expensive, which is why so many small business owners have this coverage.
One of the biggest differences between a BOP and a standalone general liability insurance policy is with a BOP you can save money on small business insurance. It lets you cover multiple risks at less cost than buying individual policies separately. A general liability policy only covers certain types of third-party liabilities, and does not protect your business property.
Additionally, a BOP is not available to all businesses. While any business can buy general liability insurance, BOPs are typically limited to businesses that are considered low risk. If you work in an industry that is known for expensive lawsuits, a BOP might not be available to you.
A general liability policy and a BOP both offer financial protection from standard business risks such as premises liability, property damage liability, and advertising liability claims.
Because a BOP already includes general liability coverage, you would only need to purchase one of these two policies.
You can customize either policy with additional coverage endorsem*nts. You could add commercial auto insurance or product liability insurance to either a general liability policy or a BOP.
General liability insurance covers liabilities involving other people and their property. It doesn’t cover the cost of a business shutdown or your business property, such as the building itself, your computers, and other equipment.
If you damaged someone else’s business or property, it would be covered by your general liability policy.
However, if your business suffered a property loss of its own equipment from theft, vandalism, fire, or an extreme weather event the loss would not be covered by your general liability policy. This type of coverage also wouldn’t cover your financial losses from having to temporarily close your business after such an event.
That’s why BOPs are so popular among small business owners. They protect against several risks, while saving money on premiums. A BOP would also meet a commercial landlord’s requirement to have property insurance in order to sign a lease.
FAQs
Essentially, the key difference between a business owner's policy vs. commercial general liability is that a BOP helps pay for a wider variety of possible accidents and risks that a business is exposed to. Compare commercial property insurance to a BOP.
What kind of policy is a business owner's policy BOP? ›
A Business Owner's Policy (BOP) bundles business property and liability insurance into one policy. This means it can help cover claims of bodily injury and property damage to your building, equipment or inventory.
Is general liability the same as business insurance? ›
General liability insurance, also known as commercial general liability insurance or business liability insurance, helps cover: Costs for property damage claims against your business. Medical expenses if a customer gets injured at your business. Administrative costs to handle covered claims.
Is CGL on BOP form? ›
BOP Policy Forms
The BOP is a package policy that provides commercial property and CGL coverage. However, it is written using special businessowners forms and endorsem*nts, rather than monoline commercial property and CGL forms.
What is not covered under a BOP policy? ›
BOPs do NOT cover professional liability, auto insurance, worker's compensation or health and disability insurance. You'll need separate insurance policies to cover professional services, vehicles and your employees.
What is liability coverage under a BOP? ›
General Liability insurance can include Premises Liability for accidental injuries like slips, trips, and falls at your property. A BOP helps protect you by paying for costs or damages if you're held responsible. It also covers legal defense costs if you're sued, and as your business is unique, so is your BOP.
What damages are covered by a CGL policy? ›
A Commercial General Liability (CGL) policy protects your business from financial loss should you be liable for property damage or personal and advertising injury caused by your services, business operations or your employees.
What is the difference between a BOP and commercial package? ›
A CPP provides businesses with more options and flexibility when putting together their business insurance program. With a BOP, you get the three coverages that are assigned to the policy, but with a CPP, you can basically design your insurance bundle from scratch to better fit your business's needs and risk profile.
Who is an insured under a CGL policy? ›
Usually, the named insured/s in a CGL policy are the following entities: The individual. The business (legal name), which could be a sole proprietorship, partnership, limited liability company, a trust, or another type of organization.
What is the difference between a BOP and a CGL? ›
The main difference is what is covered under each policy. BOPs combine commercial general liability with property damage coverage, while CGL policies typically only cover third party liability claims (and do not cover property damage for a business's own property).
The BOP is a package policy providing most of the property (both direct and indirect), crime, and liability coverages that small and medium-sized businesses require. The BOP does not cover businesses related to autos, bars, and banks.
What comes under BOP? ›
The balance of payments (BOP), also known as the balance of international payments, is a statement of all transactions made between entities in one country and the rest of the world over a defined period, such as a quarter or a year.
What is the abbreviation for general liability insurance? ›
Commercial general liability (CGL) insurance provides a financial safety net in case you're sued for a bodily injury that occurred at your business, for damaging a visitor's property, or causing an advertising injury, such as slander, copyright violation, or libel.
Is commercial general liability the same as errors and omissions insurance? ›
No. Although both are types of liability insurance, they are not the same type of policy. When looking closer at errors and omissions insurance vs. general liability insurance, you'll find that they don't cover the same types of incidents.
Is general liability the same as certificate of insurance? ›
A certificate of liability insurance is a document that proves you have general liability insurance coverage. It is also called a general liability insurance certificate, proof of insurance or an ACORD 25 form. This document includes details about: Coverage amounts and limits.
Is third party liability insurance the same as general liability insurance? ›
The two most common third-party insurance policies in construction are general liability insurance and professional liability insurance, also known as errors and omissions (E&O) insurance.
