Business Owners Policy vs Commercial General Liability Policy: What’s the Difference?

November 07, 2023
A business owner considered business insurance policy types

When considering how to best help protect a small business, business owners may wonder which insurance policy types are the right fit. Two common options are commercial general liability policies and business owner's policies. We discuss the differences between the two policy types here.

What is the difference between a Business Owner's Policy and a Commercial General Liability Policy?

Business Owner’s Policy (BOP)

A business owner's policy may be convenient for small businesses because it typically combines commercial general liability insurance and commercial property and liability coverages into one policy. While the terms, conditions and exclusions of each policy will vary, BOPs generally cover the following:

  • Commercial buildings
  • Business personal property
  • Business interruption
  • Third-party bodily injury liability
  • Third-party personal and advertising liability

A BOP can help cover legal fees and court costs in the event that a covered claim is filed against a business. A standalone commercial general liability insurance policy is typically not necessary if a business has a BOP in place.

Commercial General Liability Insurance (CGL)

This type of coverage is another common policy option for small businesses. Commercial general liability policies help protect business owners against financial liability arising from certain third-party claims. While the terms, conditions and exclusions will vary, a CGL policy generally covers third party bodily injury and property damage claims and may also cover claims related to slander and libel. As a third party liability coverage, CGL policies generally do not cover damages to the business’s own property or bodily injury suffered by the business owner or its employees. Some leasing contracts may require commercial general liability insurance to be maintained by businesses renting property.

Having the right insurance in place is an important risk management tool which can help navigate what could otherwise be a challenging situation.

Breaking it down: what is the difference here?

The main difference is what is covered under each policy. BOPs combine commercial general liability with property damage coverage, while CGL policies typically only cover third party liability claims (and do not cover property damage for a business's own property). Commercial general liability insurance also sometimes gets confused with professional liability insurance. To learn the difference, read our blog about general liability vs professional liability.

Which policy is right for your business? Acrisure can help you find the right policy for your business needs. Check out our Coverage Tune-Up. It’s a quick quiz that matches your business type with coverage options. Or consider contacting us to have a licensed agent walk you through what may be right for your business.

Operating a small business is hard work—it is important to help protect it. Commercial general liability and business owner’s policies are two common options to consider.

Request a small business insurance quote today to get started.

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