Commercial
General liability or a business owner's policy: which fits your business?
What each one can cover, which small businesses usually qualify for a business owner's policy, and how to tell what yours needs.
Short answer
General liability can pay when someone says your business hurt them or broke their stuff. Say a customer slips in your shop. A business owner's policy, or BOP, often adds coverage for your own building, equipment, and stock. It's built for small businesses, but not all qualify.
What does general liability cover?
General liability is for when your business is blamed for someone else’s injury or damage. It can pay their medical bills or repairs. It can also help pay for your lawyer if they sue, even when the claim turns out to be wrong.
Say a customer slips on a wet floor in your shop and breaks a wrist. Or say you’re painting a client’s living room and knock over their TV. General liability is made for moments like those.
It often covers what you sell, too. Say a candle from your shop tips over and burns a customer’s table. Many general liability policies could help pay for the damage.
Many policies can also cover some claims about your ads. Say a flyer uses a photo you didn’t have the rights to. Policies vary on this part, so check yours.
What it usually doesn’t cover
General liability is about other people. It usually doesn’t pay for:
- Your own building, tools, equipment, or inventory.
- Injuries to your own workers. That’s workers’ compensation.
- Crashes in your work vehicles. That’s commercial auto.
- Mistakes in your advice or services. That’s professional liability, sometimes called errors and omissions.
What is a business owner’s policy?
A business owner’s policy, or BOP, puts a few coverages small businesses often need into one package. It often includes:
- General liability, the same coverage described above.
- Property coverage for your building if you own it, plus your equipment, furniture, and inventory.
- Business income coverage, which can replace lost income if a covered loss forces you to close for a while.
Bought as a package, it often costs less than buying each piece on its own.
Say a fire in the shop next door spreads into your bakery. Your ovens and supplies are ruined, and you’re closed for a month. General liability alone usually wouldn’t pay for any of that. A BOP’s property and business income coverage could help pay for repairs and replace lost sales.
How do they compare?
| What it can cover | General liability | Business owner’s policy |
|---|---|---|
| Someone else’s injury or property | Yes | Yes |
| Your building, equipment, and inventory | Usually not | Usually |
| Lost income after a covered loss | Usually not | Usually |
| Who can buy it | Most kinds of businesses | Smaller businesses that qualify |
| Price | Usually lower | Usually higher, but can cover more |
Who qualifies for a business owner’s policy?
BOPs are made for small businesses with lower risk. Each insurance company sets its own rules. They usually look at your type of work, your size, your sales, and your building.
A small office, a boutique, or a corner bakery is often a good fit. Riskier work, like roofing, or a bar that makes most of its money on drinks, often isn’t. Those businesses may need general liability and property coverage as separate policies.
Note
Your home insurance often covers very little business property. Say you run an online shop from your garage and keep $8,000 of stock there. If a fire ruins it, your home policy may pay only a small part, or nothing. Check your policy, or ask us, before you count on it.
Which one fits your business?
Start with one question: what would hurt most if it were gone?
- You work at other people’s places and own little gear. Say you clean houses or walk dogs. General liability alone may be enough. You can often add coverage for your tools if you need it.
- You have a shop, an office, or stock on shelves. Say you run a gift shop. A BOP is often the better deal, since you need property coverage anyway.
- A short closure would hurt you badly. Say a burst pipe shuts your hair salon for two weeks. Business income coverage in a BOP could help pay rent and payroll while you’re closed.
Your lease or client contracts may also require certain coverage. Read them before you buy, so your policy matches what they ask for.