Business Owners Policy

Business Owners Policy (BOP) 101: Everything You Need to Know

If you own a small to medium-sized business and are looking for insurance, you probably need a policy called a Business Owners Policy or BOP. This policy offers all the coverage types you need in one policy. It even allows you to add extra features tailored to your business’s unique needs. 

Business Owners Policy can be tailored to meet the specific needs of every business owner depending on their industry or situation by adding additional optional coverages, also known as endorsements. One of the most popular endorsements is data breach coverage. If your business stores or handles private customer information, you can buy extra coverage to protect yourself in case of a data breach. To make the Business Owners Policy simple, here is everything you need to know about BOP. 

Two women discussing business during a meeting.

Types of Business Owners Policy Coverage

The BOP insurance policy has become the go-to coverage for businesses and consist of the following coverages:

General Liability

General Liability provides protection against the risk of claims resulting from Bodily Injury and Property damage. This part of the policy also offers coverage for Medical Payments, Damages to rented premises and Products/Completed operations. Since the Liability coverage is packaged with physical damage coverage, the premiums are typically less than if the coverage was purchased separately.

Property Coverage

The property section of the BOP policy offers coverage for buildings if owned by the policyholder and Business Personal Property as well. Business personal property is typically the business’ furniture, office equipment, inventory and other supplies. Spoilage coverage is also available for those businesses such as restaurants that have perishable products. The coverage can also include coverage for someone else’s property in the custody of the business.

Business Interruption

The BOP also provides coverage against business interruption. This means that if your business is unable to operate because of damage resulting from a fire or windstorm, the insurance company will reimburse the business owner for loss of income while they relocate to a temporary location. This coverage usually provides monthly reimbursement for a period of time selected when the policy is purchased.

Personal Injury Coverage

This part of the policy offers the insured coverage in the event they have liability arising from false arrest, libel, slander, defamation of character, wrongful eviction, and invasion of privacy.

Additional Insured Coverage

The Business Owners Policy can cover a mortgage company, customer or landlord. The policyholder can also add a lien-holder as additional insured for a property that might be leased or financed.

Liquor Liability

For those businesses that serve alcohol, the policy can be endorsed to provide liquor liability coverage for claims resulting from alcohol consumption.

Other Available Endorsements

Fire Department Service Charge – Provides reimbursement to the business owner when their responding fire department charges a fee for service.

Outdoor Signs – Most businesses will spend at least several hundred dollars up to thousands of dollars for outdoor signs. This endorsement provides coverage if the sign is damaged as a result of a storm, etc.

Data Breach – This endorsement provides coverage in the event that the business suffers from a data breach. It provides coverage to allow the business to meet the requirements in the jurisdiction they operate and take the necessary steps to inform impacted individuals that their data is safe going forward.

Salesperson Samples – Provides coverage for products for sample or display services off premise from the business location.

Equipment Breakdown – Provides coverage if equipment owned by the business such as air conditioning or heat breaks down.

The business owner policy can be endorsed with many more coverages that may be required by the business owner, which makes it the most comprehensive policy available. Many companies will insure home-based businesses with this policy. This policy is the typical selection for main-street business owners from small to midsize businesses.

Business Owners Policy Cost

BOP insurance cost depends on a number of factors, including your business’s location, risk factors, number of employees and size. Usually, purchasing a policy bundle is more affordable than purchasing General Liability and Property Insurance separately. Most insurance providers offer a discount of 15 to 20 percent for bundles while premiums range anywhere from $500 to $15,000. 

Business Insurance Policy FAQ

What Types of Businesses Are Not Eligible for BOP?

The Business Owners Policy is designed for small businesses. The BOP may not be a good option for certain medium and large businesses because they cannot tailor the coverage to their needs. For example, if you are a manufacturer, you should consider getting a General Liability policy instead.

Is the BOP Required by Law?

Whether or not certain insurance policies are required by law depends on the type of business you operate. While a BOP is not required by law, sometimes General Liability is, and because the BOP comprises General Liability and Property insurance, it may be the best option for you as far as coverage and price go. 

What are the Limits to a BOP?

The limits of a Business Owners Policy usually vary according to the General Liability and Property Insurance policies in your bundle. Typically, Business Interruption Insurance provides up to 12 months of income for businesses when they are forced to suspend operations due to a covered event. Your BOP policy may also list certain items as “property not covered” under Property Insurance. 

Did you find this article useful? If so, make sure you read more about Commercial Property Insurance too!