General Liability Insurance vs. Business Owner's Policy (BOP)

General liability insurance provides coverage for third-party claims of damages because of bodily injury, property damage, and personal and advertising injury. A business owner’s policy (BOP) bundles general liability with commercial property insurance, offering the broader protection in a single policy for businesses that own or rent a physical space and operate with valuable equipment.

As a small business owner, your to-do list just keeps getting longer. The right insurance policy can give you peace of mind so you can focus on what really matters: tending to your customers and growing your business.

With so many business insurance policies to choose from, selecting the right one can require days of research. This short guide highlights the key differences between two popular policies: general liability insurance and a business owner’s policy (BOP).

Quick Comparison: General Liability vs. BOP

What is General Liability Insurance?

General liability insurance is a must-have policy for many small business owners. Also called commercial general liability (CGL), it helps protect your business against financial loss due to damages claimed as the result of bodily injury, property damage, or personal and advertising injury.

If your clients or non-employees you interact with during the course of business bring claims against you, your policy can provide an investigation of the claim, a legal defense if action is taken, and payment or settlement for covered damages. Here are a few real-world examples:

• Bodily injury – A handyperson brings tools to a jobsite. If a client steps on a stray nail and suffers an injury, the client could sue for the cost of their ER visit and any rehabilitative care.
• Property damage – A photographer shooting in someone’s home on a temporary job accidentally knocks over an expensive lamp while angling for a shot. The homeowner could sue for property damage, and if the case goes to court, legal fees may apply.
• Personal and advertising injury – A cosmetologist creates an ad that not-so-subtly shades the local competition, pointing out truthful issues with their business model. If a competitor accuses the business of damaging their reputation, the business could be held liable for damages.

General liability insurance can provide coverage that applies to many workplace accidents and incidents—but it is not a silver bullet. Depending on the specifics of the policy, general liability insurance covers some types of third-party claims, but it may not meet all insurance needs of a business owner. That’s one reason some business owners opt for a more packaged business owner’s policy instead.

What is a Business Owner’s Policy (BOP)?

A business owner’s policy (BOP) packages two core coverage types together: general liability and commercial property insurance. With a BOP, a business receives coverage for third-party claims of bodily injury or property damage, combined with protection for physical loss or direct damage to owned property.

Business owners appreciate the simplicity of a BOP because they don’t need to purchase separate property and liability policies. Because the coverages are bundled together, the overall cost of a BOP may be lower than buying standalone policies individually.

BOP is a strong solution for service-based businesses (such as technical, professional, financial, or personal care), retail stores, and small restaurants and cafés. Insurance companies will often approve small contractors — such as those performing residential construction, landscaping, carpentry, or drywall work — as eligible to be covered under a BOP.

How do General Liability and BOP Coverages Work in Real-World Scenarios?

In practice, a BOP provides broader protection than general liability alone, particularly when a business faces its own property damage and income loss at the same time. The following scenario illustrates the difference:

Say you’re an interior designer operating out of a studio. Your studio is damaged by a fire. From the computer you used to map out projects to the swatches and displays central to your marketing efforts, you’re scrambling to keep business moving. You’re forced to temporarily shut down.

And it’s not just the physical damage that affects you. As you deal with the aftermath of the storm, you can’t resume normal operations for several weeks.

Here’s how each type of coverage responds:

• General liability insurance does not cover property you own or property in your care, custody or control. In this scenario, it would not cover damage to the studio or its contents.
• Commercial property insurance (included in a BOP) provides coverage for accidental loss or damage to your place of business and the contents/equipment inside it. In this scenario, a BOP would help cover repairs and replacements to your studio and damaged contents.
• Business interruption insurance (an additional coverage in the BOP) provides coverage for recurring costs when a covered loss forces a temporary closure. In the event of a forced temporary closure, business interruption insurance can help cover essential expenses such as rent, loan payments, and lost income. The BOP also provides coverage for necessary extra expenses that enable you to keep your business running during the period of restoration that you would not have had to pay had the covered loss not occurred.

Not all business owner’s policies are created equal. Make sure you understand your specific policy terms, as well as any exclusions.

General Liability vs. BOP: Which is Right for You?

The right policy depends on whether your business has a physical space, valuable equipment, or needs coverage for property it owns – not just third-party claims.

General liability is better suited for solo contractors, freelancers, or client-facing professionals who primarily need protection against third-party claims and do not have a physical business premises. A BOP works best for small businesses that operate from a physical location, carry inventory, or own property at the physical location that would be costly to replace.

Other Kinds of Business Insurance

Even a comprehensive business owner’s policy may not meet all your insurance needs. Other specialized policies can help better protect your bottom line — and in some cases, they’re legally required.

For example:

• Workers’ compensation insurance is required for most businesses with one or more employees. This insurance helps provide coverage if employees suffer injury or illness while on the job. (General liability coverage only covers client and third-party claims of bodily injury.)
• Professional liability insurance helps provide coverage for claims of errors, omissions, and negligence related to professional services that cause financial loss to a third party.
• Business equipment protection helps protect a business owner’s owned or leased equipment in the event of an accident.

Protect Your Business with Thimble

When selecting a business insurance policy, consider your specific risks and needs. The decision to purchase only a general liability policy vs. a BOP can depend on several factors, including the complexity of your operations, whether you have physical property at an owned or rented location, and the limits needed to cover your individual business exposures.

At Thimble, the goal is to make business insurance effective and understandable. Thimble offers general liability insurance, BOP and more coverages all built for small business owners — whether you need coverage by the job, by the month, or for the full year.

To get general liability insurance, click “Get a Quote” or download the Thimble mobile app, enter a few details about your business including ZIP code and desired coverage length, and receive an instant quote.

From there, you can purchase your insurance with a click and manage changes directly from the Thimble app. Receive as many COIs (Certificates of Insurance) and add as many Additional Insureds as you need at no additional charge.