A Business Owner’s Policy vs. General Liability: What’s the Difference?

If you spend even a little time researching small business insurance, you’re likely to come across these two coverages: General liability insurance and a business owner’s policy (BOP). What are they, what do they do, and which do you need? 

The coverage names themselves don’t necessarily help with clarity. A policy that’s “general” may seem like it’s insurance that would cover all or most risks facing a small business owner. On the other hand, “business owner’s policy” seems like it’s specifically for anyone with a business.

This article will help you understand the difference between general liability and business owner’s policy, what each type of coverage does, how they compare to each other, and which coverage might be best for your small business.

What is General Liability Insurance?

General liability (GL) can help cover the costs of claims, medical bills, legal expenses, and more. Here’s a brief overview of what GL can cover:

Third-party property damage

General liability policies can help cover expenses if you accidentally break, damage, or destroy a client’s personal property.

Third-party injuries

If a customer is injured at your office or worksite, a general liability insurance policy can help cover their medical expenses.

Advertising injury

A GL policy can help cover claims and legal expenses if you’re sued as a result of your business’s advertising, marketing, or social media activities.

Faulty products

If you sell a faulty product that causes bodily harm or damage to a customer’s property, a general liability can help cover claims and legal costs.

General liability is a cornerstone coverage we recommend for just about any business.

What is Business Owner’s Policy Insurance?

One way to think about a BOP is like general liability insurance, plus. A business owner’s policy typically bundles three types of small business insurance together:

General liability insurance

This is the same coverage mentioned above. It can help cover costs from third-party bodily injury, damage to someone else’s property, and personal or advertising injury claims.

Commercial property insurance

If you have a storefront, office space, or other building for your business, commercial property insurance can help cover damages caused by fire, theft, weather, or other similar events. It also can help cover damage to physical assets such as inventory, supplies, equipment, tools, and machinery.

Business interruption insurance

If your business is forced to close for a period of time, business income coverage can help pay for lost income, which can help get your small business back up and running up quicker.  This is also known as business income coverage. 

Other coverages you can add to a BOP

Depending on your specific business, you can add optional coverage to your business owner’s policy to make it an even better fit. For example:

• Cyber insurance
• Employee theft coverage
• Spoiled merchandise coverage
• Forgery coverage
• Equipment breakdown coverage

Brick-and-mortar businesses with inventory and equipment, such as restaurants and retail stores, often can benefit from BOP liability coverage. A business owner’s policy could make sense for many small business owners who don’t have a lot of time to search for different coverages, prices, and providers.

Coverage Comparison
Feature	General Liability	Business Owner’s Policy
Core Coverage	Third-party bodily injury, property damage, personal/advertising injury	GL + Commercial Property + Business Interruption
Focus	Third-party liability risks	Comprehensive protection for common small business risks (liability & property)
Included Policies	Stand-alone liability policy	Bundles multiple coverages into one policy
Cost-Effectiveness	Can be purchased alone for as low as $20.83/month*	Often more affordable than buying separate policies
Recommended For	Most businesses, especially those with minimal property or no physical location	Small- to medium-sized businesses with a physical location and assets

*Displayed price is an estimate based on the 10th percentile of General Liability policies sold by Simply Business between January–June 2024, divided evenly across a 12-month policy term. Actual price and payment terms, including an initial down payment, may vary, based on your state, insurance provider, and business.

Which One Do You Need?

Here are some basic considerations to help you determine whether a general liability policy or a business owner’s policy might be best for you:

General liability for business owners may be for you if:

• You’re looking to financially protect your business against the costs of third-party property damage, third-party bodily injury, advertising injury, and faulty products.
• You have no physical business premises or significant assets.
• You rent office space and your landlord requires it.

A business owner’s policy may be for you if:

• You want the protection of general liability insurance.
• You own or rent a physical location (storefront, office, workshop).
• You have valuable equipment, inventory, or furniture.
• You want to protect against lost income if your business is forced to close as a result of a covered event.
• You’re looking for a cost-effective way to get comprehensive coverage.

Get Help from Experts

No one knows your business better than you. We feel the same way about insurance. That’s why we’ve designed an online insurance experience that can tailor coverage specifically for your business. Spend just 10 minutes and you can compare options from leading small business insurers and choose the one that works best for you.

We also have licensed agents available to answer questions and help with recommendations. They’re here Monday-Friday, 8 a.m. to 8 p.m. (ET) at 855-869-5183. 

Looking for more information? Check out our online resource center filled with helpful information about small business and small business insurance. Here are some recommendations:

What to Know About Adding Coverages to Your Business Owner’s Policy

Business Owner’s Policy Coverage Guide

A General Liability Insurance Guide for Small Business