What is a Business Owners Policy?
A Business Owner’s Policy—often abbreviated to BOP—is an insurance package that combines Commercial Property Insurance and General Liability Insurance. This coverage combines some of the most needed policies for small business owners into a single package. A BOP is often the most affordable way to protect a business that needs several policies. This handy guide will help you discover how BOPs can simplify the daunting insurance landscape.
What Does a Business Owners Policy Include?
A business owners policy typically includes commercial property insurance, general liability insurance, and sometimes business interruption insurance:
General Liability Insurance: General liability protects you against suits involving property damage, bodily injury, and personal and advertising injury:
- Bodily Injury: This helps cover medical expenses and attorney fees if you’re sued by a third party who was injured on your property
- Property damage: This covers costs/related expenses for property damaged by or at your business.
- Personal and advertising injury: This helps cover the cost of an attorney and court expenses if you are sued for defamation or slander.
Commercial Property Insurance: This provides coverage for leased or owned buildings such as a business, apartment building, commercial property, etc. It also includes equipment and/or machinery, furniture, and inventory in the building. Some losses are not automatically covered, like flood damage. Work with your licensed agent to ensure you’re covered for any hazards unique to your area.
Business Interruption Insurance: Business interruption is often referred to as loss of income or business income coverage. This coverage can help cover your bills and payroll when you’re impacted by a loss of income.
What Businesses Need a Business Owners Policy?
If your business owns property, is at risk of being sued, or owns assets that could be damaged or stolen, you need property and liability insurance to protect your business.
Many business that benefit from a BOP include:
- Small restaurants or bakeries
- Beauty Salons
- Florists
- Boat Rentals
- Retail stores
- Wholesalers
- Auto repair shops
- Apartment buildings
Who Qualifies for a
Business Owners Policy?
This policy also comes with other endorsements for small and medium sized businesses that fit certain risk classes. These are some factors that will help determine if your business is BOP eligible:
- Commercial properties must be no more than 5 stories and/or 100,000 square feet
- Wholesale or processing buildings cannot exceed 35,000 square feet
- Some insurers only offer a BOP if you have less than $5 million in sales
Qualifying is impacted by other factors as well, like type of business, number of employees, and total revenue. Each insurance company has their own policies, but our knowledgeable agents can help you find out if you qualify for a BOP.
Business Owners Policy Cost
BOPs generally cost between $500-$700 annually, but your final rate will be based on several factors:
- Size of your business/number of employees.
- Annual revenue
- The type of business/associated risks
- Deductibles and coverage options
Other Policies to Consider Adding to Your BOP
A BOP can include more than just property and liability insurance. Here are our recommendations:
Also referred to as Workers Comp, Workers Compensation Insurance is the form of insurance which provides medical benefits and wage replacement to your employees if they are injured on the job. It is mandatory for small businesses in most states if you have above a certain number of employees.
Commercial Auto Insurance:
Commercial auto insurance covers a small business’s vehicles and their drivers. If your circumstances dictate it, your auto coverage can be combined with property and casualty insurance in your business owner’s policy.
Equipment Breakdown Coverage:
Also referred to as ‘Boilers and Machinery Insurance,’ this insurance protects expensive equipment such as furnaces, AC systems, phones and computers, and more if damaged by an electrical surge or simple equipment breakdown.
Cyber Liability Insurance:
This coverage is also referred to as Data Breach Coverage. If your business stores or utilizes personal data of a customer (name, social, credit card information, etc.) you are at risk of a data breach. If this were to occur, cyber liability helps cover the cost associated with credit monitoring, notifying affected individuals, and potential settlement costs.
Professional Liability Insurance:
If you make an error that incurs financial or personal loss to a client, professional liability insurance protects your small business in the case of a lawsuit. Even if you haven’t made a mistake, you are still at risk if a customer claims negligence.
Business Owners Policy Exclusions
There aren’t many! A BOP is usually written as an all-risk policy unless you ask for a named-peril policy. Here’s the difference:
All-risk coverage covers losses from any and all causes not specifically excluded in the policy.
Named-peril coverage covers only specific losses listed on the policy—the complete opposite of all risk-coverage.
Below are some perils usually excluded from BOPs:
- Military actions
- Smog or pollution
- Loss of market
- Decay, rust, or corrosion
- Nuclear hazard
- Power failure
- Losses caused by animals, birds, or insects
- Operations executed by the government
- Weather conditions (earthquakes, flooding, etc.)
- Property loss resulting from faulty design, planning, or development
- Intentional illegal actions performed by the named insured
- Criminal acts or fraud performed by the employees of the named insured
- Errors in the computer system of the insured business owner
- Errors and omissions in computer operations
- Explosion of machinery such as engines or boilers
- Water damage—including flood, seepage, or sewer backup
- Damage or loss caused by normal wear and tear
Owners need to be aware of these exclusions: if they operate in an area prone to a certain excluded hazard, they should see that the corresponding gap in coverage is filled by the appropriate policy.
Get a Commercial Property Insurance Quote
Our trained agents will help tailor a BOP that perfectly suits your business. Fill out the form at the top of the page or call us at 800-433-5353. We will gladly help you find an affordable plan that fits your business.
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