Understanding Liability Coverage in BOPs

Insuring your business is critical to your success but understanding the full scope of business insurance is sometimes hard to wrap your head around. There are many different business insurance plans on the market, and you’ll likely need several to be able to achieve optimized risk management. Still, what works for your competitor might not work for you, which is why you must personalize your coverage.

Many small businesses benefit from starting their insurance portfolio with a business owners policy (BOP). A BOP provides several types of critical commercial insurance options in one package, rather than forcing you to buy these policies separately. They usually contain three key benefits: property, business interruption, and general liability insurance.

General liability insurance is included among this coverage because of its essential role in protecting businesses from the ramifications of at-fault mistakes. Still, it isn’t all-encompassing, which is why you should use your BOP’s liability insurance as a starting point for a comprehensive liability insurance package.

Why don’t BOPs cover all liabilities?

When you buy liability insurance of any kind, you buy a policy that will help you repay others when you are at fault for harm that a third party (like a customer) sustained. Even if you didn’t intend for an accident to happen, the fact that it did could easily put you on the line for someone else’s losses.

General liability insurance is still general, even though it is very far-reaching. It is designed to cover liabilities that the average business faces no matter what its size, scope or industry. Policies frequently cover bodily injury, property damage, personal injury, product and completed operations liabilities, to name a few.

So, were a client to fall in your store, sustain a severe injury and sue you for medical bills, lost income and other financial hardships, then your CGL plan will offer you the compensation that will help you repay this person for their losses. It can also cover any legal expenses that result from fighting the claim.

Still, while third-party bodily injuries are frequently covered by CGL policies, they are not the only type of liabilities present in your business. Therefore, if you carry CGL coverage alone, then you might be denying your business the full protection it deserves.

One type of claim that a CGL plan won’t often cover is an errors & omissions liability, also known as a professional liability. These are liabilities that arise when the services and advice you provide others cause them a loss.

For example, your business might advise someone on how to repair their computer network, and then their system suffers a catastrophic breakdown. They might sue you for damages. You might not have coverage without a professional liability insurance plan, which might be included as part of your CGL coverage.

The good news is that you can generally enhance your BOP’s CGL coverage with a variety of coverage endorsements or supplementary liability coverage, including errors & omissions insurance. The more you do to expand your coverage, the better you’ll be able to withstand the ramifications of a problem.