Business Owner Policy Vs General Liability Insurance Comparison

Key Takeaways:

• A Business Owner Policy (BOP) bundles general liability, property, and business interruption coverage and is ideal for small businesses with physical assets.
• General Liability insurance is a standalone policy that protects your business from lawsuits and claims from its operations, covering bodily injury, property damage, and advertising mistakes.
• BOPs can offer better value through bundled savings and optional add-ons like cyber or umbrella insurance making them a one-stop solution for broader protection.

Did you know small businesses pay a staggering $160 billion each year on liability claims in U.S. courts? That’s why locking in the right protection for your North Carolina business isn’t just smart, it’s necessary.

If you’re feeling unsure about whether a Business Owner’s Policy (BOP) or standalone General Liability insurance best fits your needs, you’re not alone.

The Huneycutt Group is here to help you understand the differences between a Business Owner Policy (BOP) vs general liability insurance. A group of experienced, licensed insurance advisors are ready to help you compare costs, coverages, and suitability.

Business Owner Policy (BOP) Explained: Coverage, Cost & Benefits

A Business Owner’s Policy (BOP) is a bundled policy with multiple layers of insurance to protect various parts of your business. BOP policies primarily insure your business property, any business interruptions, and general liability matters.

• Business property– can also be referred to as commercial property coverage, covers theft or damage of company-owned buildings, inventory, and equipment.
• Business interruptions – reimbursement for lost income so you can pay business expenses like payroll, utilities and other business operation expenses despite having your operations interrupted (e.g., flooding, power outages, etc.).
• General Liability Coverage –can also be referred to as business liability insurance, covers third-party property damage or injury, as well as other liabilities like slander claims, copyright infringement, advertising liability claims (covered under the “Personal and Advertising Injury” component of the policy), and damage to a customer’s property.

Business Owner Policies combine multiple business coverages into one package. Bundling coverages like this can sometimes be more cost-effective.

BOP policies are best for small to mid-sized businesses with physical assets. Restaurants, retail stores, and office-based businesses often purchase Business Owner Policies.

General Liability Insurance Policy Explained: Coverage, Cost, & Benefits

General Liability (GL) insurance, aka Commercial General Liability, covers your business against third-party claims of bodily injury and/or property damage. If your business gets mixed-up in any legal matters (such as being named in a lawsuit), your GL policy can offer financial help like court costs, attorney’s fees, and settlement funds too.

Keep in mind, coverage that’s labeled ‘professional liability insurance’ is different from General Liability. Professional liability refers to a specific type of insurance for professionals that perform a service using their specialized knowledge– think doctor or accountant.

General Liability insurance is the most widely used type of business insurance. Industry insiders estimate around 75% of small businesses have a General Liability policy. General Liability can be used for most business types like mobile businesses and subcontractors.

Business Owner Policy vs General Liability: Which Is Right for Your Business?

Below is a breakdown of the key differences between a Business Owner Policy (BOP) vs a General Liability Insurance (GL):

Additional Coverage Factors: Business Owner Policy vs General Liability

Below are more factors to consider when buying either a BOP or GL policy.

• Business Vehicles – BOP and GL coverage are not meant to protect business vehicles. You will need to buy a commercial auto insurance policy to insure any vehicles owned and operated by the business.
• Employee Injuries – Business owners, like yourself, must get workers compensation insurance to protect employees. This type of coverage will pay for an employee’s medical bills and/or lost wages if the injury happened in the workplace.
• Wrongdoing – Neither insurance policy will cover any intentional acts of wrongdoing, including fraudulent or misleading practices.
• Audits – Business Owner Policies (BOP) usually do not require an annual audit, but this can vary by state and insurer. However, annual audits are almost always conducted for GL and workers compensation policies.
• Coverage Add-Ons – General Liability is exactly what it sounds like, general business liability coverage. If your business requires a more complex coverage plan, then you may want to select a BOP.

For example, you can add commercial umbrella coverage to a BOP which will increase the policy’s overall benefit limits. This option is not available for General Liability.

Cost Differences

Both Business Owner Policies and General Liability insurance are less expensive than you might think. Typically, the premium cost can be around $300 and up in North Carolina per month for a BOP and around $50-300 for a general liability policy. 

Premiums vary a bit based on multiple factors, including: 

• location
• number of employee 
• years in business 
• revenue
• payroll 
• coverage limits 
• deductibles
• claims history
• industry risks

In the case of BOP coverage, many business owners find bundling additional lines (e.g., workers’ comp, commercial auto) can unlock multiline discounts that narrow the cost gap.

Check out the below examples to get a better idea of how much money business owners, on average, are paying for either BOP or GL insurance. 

Neighborhood café (physical location, equipment, inventory): BOP = $247/month ($2,964/year) vs GL = $104/month ($1,248/year)

Freelance consultant (asset-light, services only): GL = $42/month ($504/year) vs BOP = $57/month ($684/year)

These are only estimates to illustrate how much premium costs can vary. It’s always best to get an insurance quote that’s customized to your specific business needs.

Under IRS rules, business insurance premiums, including both standalone General Liability (GL) policies and bundled Business Owner’s Policies (BOPs), are deductible as ordinary and necessary business expenses so long as the coverage is common in your industry and appropriate for your operations.

The bottom line: any premium you pay to protect your business is actually a long-term investment in its ongoing success. You’ve already worked so hard to get to this point, why not take the extra step to secure all your business assets? 

Can You Have Both?

Business Owner Policies are a General Liability policy bundled with business interruption and property insurance. That means there is really no need (nor would you be eligible) to buy both!

You can supplement a Business Owner Policy by bundling additional coverages like E&O, Umbrella, Cyber Liability, Employment Practices Liability, etc. Many business owners find BOP policies to be easier to manage for this reason.

BOP coverage is like a ‘one-stop shop’ with all business coverages managed under one policy number and requiring only one premium payment.  

Let’s Be Sure Your Business Is Protected Today

You’ve worked hard to build your business and it’s so important to be sure it is fully protected. Of course, if your business is new and just getting started, then you may be trying to understand which liability protections are even necessary.

No matter your situation, it is best to contact a licensed insurance advisor for help. The Huneycutt Group is here to help you figure out the best business insurance for your unique business needs.

FAQs: Business Owner Policy vs General Liability