Business Owner's Policy

A business owner’s policy, or BOP, is a type of pre-packaged insurance designed for certain types of small-business owners. The BOP allows business owners to save on liability insurance costs by bundling multiple insurance policies together for a single affordable premium.

A Business Owners Policy is simply bundled insurance designed to provide essential coverage to certain business owners at a competitive price. Most often, the insurance coverage offered by a Business Owner’s Policy includes…

  • Commercial General Liability Insurance coverage (protection from claims of property damage or bodily injury)
  • Property Insurance (to protect physical assets)
  • Insurance for several other types of loss, including lost income, advertising damage, and more

General Liability Insurance for Less with a Business Owners Policy

A BOP’s General Liability Insurance (sometimes called Commercial General Liability Insurance) protects you from the cost of defending yourself or paying the damages if an employee, contractor, customer, or other business-related third party claims that your business caused them bodily injury or harmed their property.

Your BOP may also offer a variety of other types of coverage, including Personal and Advertising Liability, Completed Operations Liability, Contract Liability, and Liquor Liability.

Property Liability Insurance for Less with a Business Owners Policy

The BOP’s Property Insurance typically insures damaged or lost property for its replacement value. This means that your reimbursement would cover the cost of replacing the property, without any deduction for depreciation based on the age of the property. It also acknowledges that your business might be held legally responsible for damage to someone else’s property while it is in your possession. When your customer’s property is in your “care, custody, or control,” it is normally covered as if it were your property.

Business Interruption Coverage for Less with a Business Owners Policy

Depending on its terms, your BOP might cover income you lose or expenses you incur as a direct result of a property loss covered by the policy. For instance, if you’re forced to close shop and move to a new office because of a fire, you may be eligible for reimbursement on the revenue you lose during the time you can’t conduct business in addition to reimbursement for moving costs.

Additional Liability Insurance with a Business Owners Policy

Business owners interested in increasing their insurance coverage limits can buy additional coverage to supplement their Business Owners Policy. Known as Business Umbrella Insurance, this type of coverage may make a BOP even more effective.

Qualifying for a Business Owner’s Policy

In order to qualify for the discount business insurance a Business Owner’s Policy offers, your business must meet certain criteria. Generally speaking, a business does not qualify for a BOP if it…

  • Is involved in highly specialized or high-risk operations
  • Occupies large premises
  • Needs business interruption coverage lasting longer than 12 months
  • Needs higher limits of liability than a BOP package offers

While a BOP can help many businesses save money, it generally isn’t a good fit for businesses with higher liability risks. For high-risk companies, the coverage limits offered by a standard BOP are usually insufficient. Even if a BOP is a good fit for your business, keep in mind that not all BOPs offer uniform coverage; be sure to check with your agent whether your BOP meets your business’s needs.