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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.
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 insurance is a must-have policy for many small business owners. Also called commercial general liability (CGL), general liability insurance provides your business with protection against damages claimed as the result 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 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, or 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 knock over an expensive lamp while angling for a shot, they could sue you for property damage. If the case goes to court, you may be responsible for legal fees.
- Personal and advertising injury – You’re a cosmetologist 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 (BOP) is convenient for many small and medium-sized businesses because it basically packages two types of coverage together – general liability and commercial property. With a BOP, you receive coverage for third-party claims of bodily injury or property damage, combined with protection for fire, theft, or other direct damage incidents.
Business owners like the simplicity of a BOP because they don’t need to buy separate policies. With a BOP, the coverages are bundled together and, as a result, the overall cost may be smaller than with separate stand-alone policies.
BOP is a good 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 that perform residential construction, landscape, carpentry, or drywall to be covered under a BOP.
A BOP may be an appropriate solution for you if:
- Your business does not require much insurance coverage customization
- You have a relatively small revenue
- Your business is a startup
- Your business doesn’t yet meet the minimum revenue requirement for a commercial general liability policy
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 the physical damage that affects you. As you deal with the aftermath of the storm, you can’t resume normal operation for several weeks. The additional coverage in your business owner’s policy could come to the rescue in a situation like this. After a waiting period, if your BOP or commercial general liability policy contains a business interruption coverage extension, the insurance carrier may cover some of your loss.
A general liability insurance policy covers damage you may cause to clients’ and third-party property (which means “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.
- 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 that cause financial loss to a third party.
- Business equipment protection protects a business owner’s owned or leased equipment in the vent of an accident.
Protect your business
When selecting a business insurance policy, consider your specific risks and needs. The decision to purchase a CGL vs a BOP can depend upon a number of factors, including the complexity of your operations, whether or not you have real property, and the level of customization needed to cover your individual business exposures.
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 by the job or by the month? We’ve got you covered. Looking for a transparent policy to last for this year and beyond? We’ve got you covered, too.
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 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 receive as many COIs (Certificates of Insurance) and add as many Additional Insureds as you want at no additional charge.
Interested in BOP coverage? Enter your email and we’ll let you know when BOP insurance is available.