How does a business owners policy (BOP) differ from general liability insurance?

Q:

How does a business owners policy differ from general liability insurance?

A:

The difference between a Commercial General Liability (CGL) policy and a Business Owners Policy (BOP) is that, while the former only covers liability losses, the latter covers both liability and property losses.

A CGL policy provides coverage for bodily injury, property damage, personal and advertising injury, and medical payments subject to the terms and conditions of the policy. In addition, the policy provides a defense to the insured should they be accused of a covered loss.

A BOP does that and more. In addition to the liability coverages mentioned above, a BOP covers the building (if the business owns it) as well as the business personal property coverage. It also provides some coverage for data loss and restoration, valuable papers and records, and accounts receivable. The policyholder can also get coverage for business income, signs, money and securities, equipment breakdown, and employee dishonesty (learn How to Protect Your Business from Coverage Gaps Related to Equipment Breakdowns).

One last difference between the two is that a CGL does not provide coverage for auto-related losses. A BOP can be endorsed to provide coverage for liability associated with hired and non-owned autos (see Is Rental Car Insurance Worth it? for a discussion of coverage for individual renters).

Because of the property coverage limitations in a BOP, it is not appropriate for every insured party. In many cases, a CGL, combined with appropriate commercial property and auto policies, may be the best solution for an entity’s insurance needs (for more on auto policies, see The Ultimate Guide to Auto Insurance). For those entities whose needs are met by a BOP, it is a convenient single-policy method for addressing the insurance component of their risk management program.

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Written by Marc Jorge Estrella
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Marc Jorge Estrella is an insurance professional with extensive interdisciplinary experience in the property and casualty insurance industry. His career in the industry spans the areas of information technology , complex claims management, policyholder advocacy and insurance company operations. He also has experience in developing and presenting educational materials in both classroom and online formats. 

Mr. Estrella received his Master of Science in Insurance Management from Boston University, and his Bachelor of Arts in Economics and Business Administration from Trinity University. He also holds both the Chartered Property Casualty Underwriter and Certified Insurance Data Manager professional designations. He is a resident of San Francisco, California.

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