General liability insurance and a business owner’s policy (BOP) both cover the costs associated with third-party claims of physical injuries, property damage, and advertising injuries. However, a BOP includes added protection of commercial property insurance for your business’ physical assets. BOPs are a good option for small businesses looking to bundle their insurance for savings.
To protect your small business with a customized BOP or general liability, work with The Hartford. Its small business specialists can help you find the appropriate coverage for your needs. Getting a quote online is fast and easy—the application only takes about 10 minutes to complete.
General Liability vs Business Owner’s Policy Comparison
General Liability Insurance
Business Owner’s Policy (BOP)
$400 - $600 per year
$350 - $3,000 per year
Small- to medium-sized businesses
When it comes to general liability insurance vs business owner’s policy, business owners need to know that they share key similarities. General liability insurance provides basic liability protection for claims arising from bodily injury, property damage, and reputational harm. General liability policies typically pay the injured party’s medical and repair bills, plus your legal fees if they sue.
A business owner’s policy bundles general liability and commercial property insurance into one product. Commercial property insurance reimburses you for insured business property or assets that are lost or damaged by fire, theft, or windstorms. BOPs also generally include business interruption coverage to pay for ongoing expenses and lost income if a covered event causes you to temporarily halt operations. A BOP has the same protection as a standalone general liability policy and more. If you purchase a BOP, you don’t need a separate general liability policy.
Here’s a visual representation of coverage provided by both policies:
Because BOPs bundle policies, insurance carriers can offer them at a discounted rate—costing less than what you would spend on standalone policies. Both policies also can be customized with endorsements to meet your business’ coverage needs.
How General Liability Insurance Works
General liability insurance protects your small business from third-party liability claims, including bodily injury, property damage, medical payments, and others, that can arise from your business operations. It may also include claims for advertising injuries, such as copyright infringement, libel, and slander. General liability policies typically cover a business’ legal defense and any settlements or judgments awarded to an injured party.
Generally, if a third party (i.e., anyone who doesn’t work for your company) is injured in some way while doing business with you, your general liability insurance provides coverage. General liability insurance does not cover damage to your commercial property or assets, accusations of negligence, damage to customer’s property in your possession, or damage intentionally caused by your business.
Obtaining a general liability policy and a certificate of insurance to provide proof you’re covered demonstrates your business is responsible, established, and credible. Customers are more likely to do business with you when they know you have liability insurance for financial protection.
How a Business Owner’s Policy Works
A business owner’s policy includes the same liability coverage offered in a general liability policy, including protection against liabilities like third-party injury and property damage, reputational harm, and product-related claims. It also includes the bonus of commercial property insurance for coverage of company property and assets owned by and used for your business.
Additionally, BOPs offer business interruption coverage for lost income and ongoing expenses when a covered event forces you to pause operations. Typically, insurers only cover these costs for 12 consecutive months, but it can help you pay for lost revenue, employees’ wages, rent, utilities, and relocation expenses.
BOPs are designed specifically for small- or medium-sized businesses, depending on the carrier. Your business needs to meet certain eligibility requirements to qualify for a BOP. These are usually based on revenue, industry, and number of employees.
Business Owner’s Policy Eligibility
A business owner’s policy combines protection for property and liability risks in one package. This bundle is typically sold at a premium that is less than the total cost of the separate policies. Specific coverage included in a BOP varies among carriers, but most policies require businesses to meet certain eligibility criteria to qualify.
Business Owner’s Policy Eligibility Criteria
Typical BOP Requirements
Some insurers require $5 million or less annually;
others $1 million or less annually
Number of Employees
Some insurers require fewer than 100 employees;
others fewer than 10 employees
Small office or work location
Brandon Gehring, Agent, Insurance Werks Services, typically recommends a business go with a BOP when it’s available.
“Unfortunately, BOPs are not available for many classes of business. Contractors, for example, are almost exclusively written on a standalone general liability policy. Most ‘Main Street’ brick-and-mortar businesses are eligible for BOPs (e.g., florists, dry cleaners, and offices).”
When to Use General Liability Insurance
Most business owners need commercial general liability insurance because it covers the risks they face most often. In fact, it’s called general liability because it covers the liabilities that businesses have in common. Though it’s not legally required, you may find that clients and landlords require it.
Your business might need general liability coverage if:
- Your business has steady foot traffic: Say a customer trips and falls at your business. A general liability policy can help pay for their medical treatment, and, if they decide to sue your business for the accident, it can help pay for your legal defense.
- You or your employees visit clients: General liability travels with you when you visit clients or worksites away from your primary business location. For example, if you damage a client’s property in their home, general liability has you covered.
- You want to land more clients: Clients often consider general liability coverage a prerequisite for working with them because they don’t want to be held liable for your business’ actions.
- Your landlord requires you to have it for a lease: Renting or leasing a space for your business? Many landlords require general liability coverage to ensure they aren’t held liable for incidents for which your business is responsible.
The amount of general liability coverage business owners need depends on risk exposure and contractual requirements. Generally, the more risk your business or industry has, the more coverage you need. Additional coverage options may be available depending on your insurer.
When to Use a Business Owner’s Policy
Business owners often purchase a BOP instead of separate general liability and property policies to ensure they have the coverage they need. Even if your business has minimal property, you still want to make sure it’s protected. It also saves money by taking advantage of the discounted bundle of a BOP.
A business owner’s policy offers all the protection of a general liability policy, plus commercial property and business interruption coverage. If you qualify, it’s often cheaper to purchase a BOP than to buy each policy separately. For small, low-risk businesses, a BOP is an excellent insurance package delivering more protection at a discounted price.
When to Add a Home Business Insurance Endorsement to Your Homeowners Policy
If your business operates out of your home, you may not have much need for the packaged protection of a business owner’s policy. However, most basic homeowners insurance excludes coverage for business liability and offers only limited coverage for business property. Talk to your insurance agent about adding a business endorsement to your homeowners insurance.
By adding liability or property coverage as an endorsement to your homeowners policy, you ensure you have some protection for your business. A home business endorsement can increase business property coverage limits and address some business liability exposures. Many policies cover damage to business property owned or used by the homeowner for up to $2,500 on premises or $1,500 off premises.
General Liability Insurance vs Business Owner’s Policy: Covered Risks
When you’re weighing coverage options for your small business, general liability insurance and BOPs have many of the same covered risks. This is because general liability is one of the policies included in a business owner’s policy. However, BOPs also include commercial property coverage.
General Liability Insurance Covered Risks
General liability insurance is a fundamental business policy because it covers risks inherent in most operations, namely harm to third parties like customers and other visitors. This is why most business owners get general liability insurance.
Standard general liability coverage has three parts. These are:
- Bodily injury and property damage: Doctor or repair bills for someone who is injured on your premises or by your product or service and who doesn’t work for your business
- Advertising injury: Losses due to claims from libel, slander, copyright infringement, and more
- Immediate medical payments: No-fault coverage for immediate medical bills, such as an ambulance ride or an emergency room visit
Business Owner’s Policy Covered Risks
Like general liability, BOPs cover accusations that your business caused property damage or physical harm to a third party. However, a business owner’s policy has the added advantage of commercial property insurance to cover your business-owned property—plus business interruption coverage.
A business owner’s policy offers the following protection for small businesses:
- General liability: Third-party claims involving bodily injury, damaged property, and reputational harm.
- Commercial property: Damage to business-owned property, including buildings and their contents.
- Business interruption coverage: Pays for lost profits and ongoing expenses if a covered event forces you to temporarily pause business operations.
General Liability Insurance vs Business Owner’s Policy: Costs
Depending on the size, type, or industry of your small business, as well as coverage limits, the price of general liability insurance or a BOP varies. Insurance carriers have different pricing based on industry, but other factors play a role, too.
General Liability Insurance Costs
Most small business owners can expect to pay between $400 and $600 per year for general liability insurance. Industry plays a large part in the cost of your premium. For example, retail shops and restaurants have a lot of foot traffic, so they often pay more for general liability. Business consultants, however, often pay less because they face a lower risk of lawsuits over third-party property damage or injury.
Business Owner’s Policy Costs
A business owner’s policy, depending on your industry and risks, typically runs between $350 and $3,000 annually. While generally more expensive than a standalone general liability policy, you’re receiving extra coverage and protection bundled into a BOP—liability, commercial property, and business interruption. BOPs typically cost less than purchasing standalone commercial insurance policies, if your business qualifies.
General Liability Insurance vs Business Owner’s Policy: Eligibility
General liability insurance and business owner’s policy cover many risks for small businesses, but every business may not qualify for coverage. Insurers typically reserve BOPs for businesses with low revenue, small locations, and few staff because this minimizes their risk for claims.
General Liability Insurance Eligibility
General liability insurance is a bread-and-butter policy for small businesses, and most businesses qualify for it. There’s almost no situation or business that won’t qualify for general liability, though high-risk industries may find that not every carrier is open to providing coverage and may face higher premiums.
Business Owner’s Policy Eligibility
BOPs are a popular choice for business owners seeking affordable coverage, but not everyone qualifies. Each carrier has different rules, but BOPs are typically reserved for small- to mid-sized businesses in low-risk industries. Additionally, businesses generally need to have fewer than 100 employees, less than $1 million in revenue, and small commercial spaces.
General Liability Insurance vs Business Owner’s Policy: Industries
Industry is an important factor weighed by insurers to determine if your business will qualify for general liability insurance or a business owner’s policy. Your risks are often determined by your business’ industry.
General Liability Insurance Industries
Numerous industries qualify for general liability insurance because it’s such a commonplace protection. If your business is in a low-risk industry, such as accounting or consulting, your general liability costs might be lower because there’s little foot traffic and reduced risk of property damage. Home-based businesses and businesses with small offices are also considered low risk.
If you’re in a high-risk industry, such as cleaning or construction, you’ll see much higher costs because your work often involves high foot traffic and visiting other people’s property, as well as risky day-to-day operations.
Business Owner’s Policy Industries
Generally, only businesses in low-risk industries will qualify for a BOP. A business owner’s policy has a cap on policy limits, and it’s often only designated for smaller businesses. The limit is the maximum amount that a carrier will pay on a claim. For example, an office-based business, like an accounting firm, is generally considered low risk. However, a construction business is typically considered high risk because of occupational hazards and working with heavy machinery.
General Liability Insurance Example
Say you own a painting business, and you regularly travel and interact with clients. If you’re at a client’s residence to paint and accidentally break a mirror, they might sue you for damages. With general liability, your policy can help pay to repair or replace the broken mirror and any other property damage.
One thing to remember: General liability insurance doesn’t cover any property your business owns. So if your assistant breaks an extendable ladder you need to paint ceilings or high exterior walls, the cost to repair or replace your equipment would only be covered by commercial property insurance, or the property coverage included in a BOP.
Business Owner’s Policy Example
Say you own a hair salon. A storm knocks a tree into the salon’s roof, effectively putting a stop to all your operations. A BOP includes business interruption coverage to help pay your expenses while the salon is closed for repairs. That means you’ll be able to pay your rent, employee wages, and lost revenue.
A BOP can even help pay for relocation costs to help you set up in a temporary space. A business owner’s policy also covers third-party bodily injury or property damage. And, if any items the salon owns are damaged when the roof collapses, commercial property insurance in your BOP can help pay to repair or replace them.
Homeowners Policy With Home Business Insurance Endorsement Example
Say you own a home-based business selling hand-knit products online. This means you have regular deliveries and pickups from the post office, creating a lot of foot traffic to your home. Because these deliveries and pickups are business-related, your homeowners policy may not cover liability protection in these situations.
If a delivery person slips outside your home, your business could be held liable. By adding a home business insurance endorsement to your existing homeowners policy, you can have protection for these types of incidents. When in doubt, call your insurance company to see what home business coverage fits your needs.
Endorsements for General Liability & Business Owner’s Policies
Depending on your business’ situation, your insurance carrier may offer additional coverage components to add onto your general liability or BOP. Typically, coverage limits for these endorsements are low, but they offer added protection at a discounted price.
Here are some endorsements you might be able to add to your policy:
- Hired and non-owned auto insurance: Covers legal expenses that arise when you or an employee has an accident with a rental, leased, or employee vehicle.
- Liquor liability insurance: Covers legal fees and medical costs if alcohol is sold to an intoxicated person who causes harm to others or damages property.
- Cyber liability insurance: Covers costs associated with a data breach or cyberattack.
- Inland marine insurance: Covers business property, cargo, or tools in transit.
- Professional liability insurance: Covers legal fees when clients claim a financial loss due to your negligence or mistakes (also called errors and omissions insurance).
- Spoilage: Covers replacement of spoiled perishable inventory after a storage malfunction or power outage.
- Employee dishonesty: Covers financial loss due to employee theft and other illegal activities.
Both general liability insurance and a business owner’s policy are highly customizable, depending on your needs. Talk to an experienced insurance agent familiar with your industry to ensure you have adequate coverage and to learn about potential discounts.
General Liability Insurance vs Business Owner’s Policy Frequently Asked Questions (FAQs)
When considering general liability insurance vs business owner’s policy, business owners may be confused because both are popular options that address their most common risks. Because they share similar qualities, business owners often have questions about how they work or if it’s a good fit for their business. Here are some frequently asked questions about general liability vs BOPs.
Can I customize a general liability policy or a business owner’s policy?
Both general liability and BOPs are customizable with most insurance carriers. Ask an agent about endorsements that may benefit your business, such as cyber liability insurance for data breach protection or inland marine insurance to protect business property in transit. Keep in mind that the coverage limits for these inclusions are typically low.
Is general liability or a BOP required by law for my business?
You aren’t legally required to carry a general liability or business owner’s policy. However, liability insurance protects against many common risks business owners face, so it makes good financial sense to get a policy. Additionally, you may need liability insurance to apply for a professional license, sign a client contract, or sign a lease.
Who is eligible for a business owner’s policy?
To qualify for a BOP, a business must be in a low-risk industry (e.g., accounting or consulting), have few employees, occupy a small work space, and have low annual revenue. Requirements vary among insurers, so you should speak with an agent to find out how your business can qualify for a discounted BOP package.
For small business owners just starting out, business insurance is a great investment to protect financial assets. General liability and BOPs offer valuable liability coverage for third-party bodily injury, property damage, and advertising injury. BOPs include the added bonus of commercial property insurance and business interruption coverage at a discounted price in one convenient package.
Protecting your small business is simple with a tailored general liability policy or BOP from The Hartford. The insurer has small business specialists who can customize a policy for your unique business.