Business Owners Policies, better known as BOPs, are a convenient way for small business owners to purchase multiple types of commercial insurance in one package. Usually, BOPs will contain liability coverage, which pertains to third party losses caused by the business. Usually, they refer to this coverage as commercial general liability insurance, or CGL insurance. Here’s a little more information on what your CGL policy will contain, and what it won’t.
This coverage will contain several types of protection. They can insure both the harm the business might cause to others, and costs the business itself sustains. CGL insurance is very convenient because it offers coverage for some of the most-common liabilities that might strike any business. However, that doesn’t mean you won’t need other coverage to augment the foundation of protection offered by CGL policies.
A liability is the state of being responsible for something. So, in the insurance world, it means a case where a policyholder is responsible for something that happens to something or someone else. Think of it in terms of your business’s responsibilities. You have a duty to take care of your customers, and if you fail to do so, then you might have to take care of their losses, as well.
Liability insurance is coverage that comes into play when you owe someone else money because of your mistakes. Your mistakes, or negligence, could harm anyone from prospective employees, to clients, visitors to the business and others. Therefore, because the mistake might be your fault, you have to compensate that person. You can use liability insurance to cover these costs.
Coverage Within a CGL Policy
There are numerous liabilities present within any business. A general liability policy will often cover those that are most-common to businesses of any shape or size. However, once you have a CGL policy, you often need to increase your coverage with something else.
In many cases, general liability policies offer the following coverage.
- Bodily Injury Coverage: If your mistakes cause someone else to get hurt in the business, this coverage might pay for their medical bills or related recovery costs. So, if you forget to mark a wet floor, and someone falls in the puddle, hurting themselves, then this coverage can compensate them for their losses.
- Property Damage Coverage: The business might damage someone else’s property. For example, a carpet cleaner might apply the wrong solvent to someone’s floors, causing severe damage. This coverage can help pay to repair the damage.
- Personal Injury Coverage: Sometimes, the business’s actions might cause reputational harm to someone else. Therefore, if the person alleges you committed libel or slander against them, then this coverage can help you repay that person.
- Advertising Injury Coverage: Your advertising might improperly target a competitor, client or other individual. It might also result in copyright infringement. Your CGL policy can repay those affected by your mistakes.
- Legal Assistance: Many liability losses could easily result in lawsuits against the business. That’s why your CGL policy will usually assist you with your legal fees, settlements and other costs related to the suit. A lawsuit might prove totally baseless, but that doesn’t mean you won’t need assistance. In this case, your policy might still be able to help you out.
- Medical Payment Coverage: Sometimes, the business will have no fault in someone else’s injuries, even if that person gets injured in your business. Medical payments coverage is a feature of some policies that will help you cover their costs, regardless of who is at-fault.
BOPs vary considerably. That’s why, when you set up your initial CGL policy, ask your agent to clarify what your policy will and will not cover. That way, you will know when you might need additional coverage added to the policy. Also, don’t forget to ask them to increase your limits to offer ample financial assistance that will be able to step in to help you in even the costliest situations.
Expanding your CGL Policy
The CGL coverage within BOPs often isn’t the only liability insurance you need. Once you have the basics, you can often expand your coverage with additional liability policies like:
- Errors & omissions (E&O) coverage
- Directors & officers (D&O) liability insurance
- Employment practices liability insurance (EPLI policies)
- Product liability coverage
- Products-completed liability coverage
- Cyber liability insurance
In some cases, you can add these policies directly to the BOP itself. In others, you might have to buy separate policies. Furthermore, specialty policies, like commercial auto liability insurance or medical malpractice insurance are usually available separately from a BOP, but they still are critical liability policies that certain businesses might need. Therefore, talk to your agent to determine the right course of action for getting covered.