Difference for Business Owners in Insurance vs. Commercial General Liability

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Business owners, depending on the size and nature of their business operations, can purchase a business owners policy, also known as a BOP, to cover their liability exposures, or opt to purchase commercial general liability policy. No matter which way the coverage is purchased, it is a necessary policy for all types of businesses.

What Does General Liability Cover

  • Commercial general liability is a third-party coverage that protects the insured from claims and lawsuits brought against them by an outside party. It provides protection for bodily injury and property damage liability that can arise as a result of a trip and fall on the business premises, or from a lawsuit alleging the business product caused damage to a third party. In addition to providing coverage for such claims, the commercial general liability policy provides defense for the insured. In other words, the insurance company's lawyers will represent the insured in the court of law to defend the claim. It is a coverage that every business whether large or small must have to protect their interests.

How General Liability Coverage is Sold

  • General liability policies are sold either as a stand-alone policy or as part of the package policy. Larger businesses qualify for the stand-alone commercial general liability policy. Because of their size and complicated nature, insurance underwriters must spend time analyzing large business risk to properly insure their liability exposures. Small businesses, on the other hand, are less complicated and have smaller exposure. Because of the similar nature of certain small businesses, the insurance industry developed a BOP package policy. A BOP includes property, general liability, crime and non-owned and hired car coverage.

BOP Type of Business

  • Generally, a mom-and-pop operation, such as a small store, very small retail shop or even a business that's run out of the home, qualify for BOPs. BOP policies are indented to insure operations that do not have complicated exposures.

Business Owners Insurance vs. Commercial General Liability

  • When business owners look at their insurance program and wonder about commercial general liability, the only question regarding the coverage should be, "Which type of general liability policy does the business qualify for?" The general liability coverage under the BOP is the same as the coverage provided as a stand-alone policy. The only difference is the type of underwriting that is required by the insurance company to make sure the policy is properly underwritten.

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