General liability vs.
business owner's policy

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As a small business owner, you have plenty to worry about. From meeting deadlines to marketing your business to managing your risks, 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.

However, with so many business insurance policies to choose from, selecting the right one can require days of research, eating up your precious time.

We’ve created this short guide to highlight the differences between two popular policies: general liability insurance and a business owner’s policy (BOP).

Let’s get down to business so you can get back to work!

What is general liability insurance?

General liability coverage is a must-have policy for many small business owners. Most licensing requirements for professionals require professional liability insurance, and many commercial properties (like an office space you want to lease) ask their vendors to take it out.

Why is general liability insurance so popular?

Also called commercial general liability (CGL), general liability insurance can provide coverage in the face of client and third-party claims of bodily injury, property damage, or personal and advertising injury.

If your clients or people you interact with during the course of business bring claims against you, your policy can help to provide an investigation of the claim, a defense if legal action is taken and payment or settlement for damages because of:

Bodily injury Property damage Personal and advertising injury

What does that mean in practice? Let’s look at a few examples.

Bodily injury – You’re a handyperson who brings tools to the job. Should a client step on a stray nail, they could sue you for the cost of their trip to the ER, as well as any rehabilitative care.

Property damage – You’re a photographer shooting in someone’s home. Should you accidentally damage their property, they could sue you for property damage. If the case goes to court, you may be responsible for your legal fees.

Personal and advertising injury – You’re an aesthetician who creates an ad that not-so-subtly shades your local competition. Should your competitor accuse you of damaging their reputation, you could be held liable for damages.

As you can see, general liability insurance can come in handy for a wide array of potential workplace accidents and incidents.

However, it’s not a silver bullet when it comes to the risks you take on as a small business owner.

Depending on the specifics of your policy, general liability insurance can cover some client and third-party claims, but it may not meet all your insurance needs.

That’s one reason why some business owners opt for a more comprehensive business owners’ policy instead.

What is a business owner’s policy (BOP)?

A business owner’s policy combines several types of insurance, usually including the following:

General liability insurance is included, along with other coverages that can help protect your financial liability. When bundled together, the overall cost may be lower than for multiple stand-alone policies.

How do these additional policies help?

Say you’re an interior designer operating out of a studio. A storm hit your city, and your place of business is flooded. Your property is damaged—from the computer you use to map out projects, to the swatches and displays that are central to your marketing efforts.

And it’s not just physical damage that affects you. As you deal with the aftermath of the storm, you can’t resume normal operation for several weeks. In a situation like this, the additional coverage in your business owner’s policy could come to the rescue (depending on the specific terms of your policy).

A general liability insurance policy covers damage you may cause to client and third-party property (not your property). Commercial property insurance provides coverage for your place of business, its premises, and the valuable equipment inside it. In the above scenario, it could help cover repairs and replacements.

Nature and chance can interrupt the normal course of your business. Storms, government mandates, and other large-scale events may force you to temporarily cease operation. In cases like these, business interruption insurance can help to cover recurring costs and lost income. In the situation above, it could help cover rent, loan payments, and lost income.

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

It’s also worth mentioning that even your business owner’s policy may not meet all your insurance needs.

Other kinds of insurance

Looking at the above list, you may think that business owner’s insurance covers just about every risk. However, other kinds of specialized policies can help better protect your bottom line. In some cases, they’re legally required.

For example:

  • Workers’ compensation insurance is required for most businesses with one or more employees. This insurance provides coverage should your employees suffer injury or illness while on the job. (Remember, general liability coverage only covers client and third-party claims of bodily injury.)
  • Professional liability insurance provides coverage for claims of errors, omissions, and negligence related to your professional services.
  • Cyber liability insurance can help protect against claims resulting from data breaches that affect your clients’ data and security.
 

Protect your business

When selecting a business insurance policy, consider your specific risks and needs.

  • If you only need protection from claims of client or third-party property damage, bodily injury, and other potential accidents, you probably want to take out a general liability insurance policy.
  • Extend your protection to your premises and potential business interruption with a business owner’s policy.
  • Don’t forget to look into additional kinds of insurance that may be legally required.
  • Look for flexible policies that meet your specific needs in terms of insurance coverage and policy length.

At Thimble, our goal is to make business insurance policies effective and understandable. That’s why we offer general liability insurance policies for small business owners.

Only need insurance for a day, week, or month? We’ve got you covered. Looking for a transparent policy to last for this year and beyond? We’ve got you covered, too.

Click “Get a Quote” or download the Thimble mobile app, enter a few details about your business including ZIP code and desired insurance coverage length, and we’ll generate an instant quote.

From there, you can purchase your insurance with a click and make changes from the Thimble app. You can generate as many COIs (Certificates of Insurance) and add as many Additional Insureds as you want, completely free of charge.

Our mission to make insurance radically simple and it starts with helping you understand these terms so you can focus on growing your business.

The content on this page has been verified by
Terri Hitchcock, JD
Chief Insurance Officer, Thimble
Terri has 38 years of industry experience and knows a thing or two about insurance, so she reviewed and approved everything on this page.

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