General liability and a business owners policy come up constantly, and they are related but not the same. Here is how they fit together.
BOP vs general liability
| General liability | Business owners policy | |
|---|---|---|
| Covers liability | Yes | Yes |
| Covers your property | No | Yes |
| Business income | No | Usually included |
| Best for | Businesses with little property to insure | Businesses with property, the common choice |
General liability on its own
General liability generally covers third-party bodily injury and property damage, plus some advertising and personal injury claims. It is the coverage leases and contracts most often require. On its own, it generally does not cover your building, contents, equipment, or lost income.
What a business owners policy adds
A business owners policy, or BOP, generally bundles general liability with commercial property coverage, and usually business income coverage, into one efficient package built for small and mid-size businesses. So a BOP generally includes the liability you would get from a standalone general liability policy, plus protection for your property and the income a covered loss could interrupt.
When each makes sense
If you have little or no property and only need liability, often to satisfy a contract, standalone general liability can be enough. If you have a location, equipment, inventory, or improvements, a BOP is usually the better value because it covers both the liability and the property in one place. Larger or more complex businesses may move beyond a BOP to a commercial package policy.
What to do
Start from what you need to protect. If it is purely liability, general liability may do. If you have property and income to protect too, a BOP usually makes more sense. A short review confirms which fits and that the limits are right.
Questions to ask your advisor
- Do I have property, equipment, or inventory that liability coverage alone leaves out?
- Would a BOP cover both my liability and my property more efficiently than separate policies?
- Is the business income limit on a BOP sized to a realistic recovery time?
- Does a standalone general liability policy satisfy my lease or contract requirements?
- Has my business grown enough to consider a commercial package instead?
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