Key Takeaways
- A BOP combines property, liability, and business interruption coverage into one convenient policy.
- BOPs are tailored to meet the needs of small and medium-sized businesses in various industries.
- A BOP does not cover employee injuries, professional errors, or auto accidents, requiring separate policies.
- Additional protections, such as cyber liability or equipment breakdown, can be added to suit your business operations.
If you own a small or mid-sized business, you probably need a business owner’s insurance policy. This policy type is, perhaps, the most essential insurance coverage option you can purchase as it covers the majority of damages and potential claims you may face in one insurance bundle.
To get a better idea of what precisely this insurance bundle includes, let’s dive into what a business owner’s policy is, who needs a business owner’s policy, what the policy can cover, and a few damages it usually will not be able to cover.
What is a Business Owner’s Policy?
A business owner’s policy (BOP) is a type of insurance package that provides small business owners with a bundle of assorted liability protections. They’re typically a combination of three or four key insurance types, including:
- General Liability Insurance
- Commercial Property Insurance
- Business Interruption Insurance
- Crime Insurance
This insurance bundle is usually sold for less than the total cost of these three policy types alone, making a BOP a cost-effective option for small businesses.
Who Needs a Business Owner’s Policy?
From retail to small accounting firms, convenience stores, photography studios, bakeries, and more, pretty much any small to mid-sized business can benefit from a BOP insurance policy. A BOP may be especially valuable to you if your business is located outside your home, has fewer than 100 employees, makes less than five million dollars in annual sales, and has property or equipment requiring insurance protections.
While BOPs can cover a wide range of risks, they do not cover every risk type, nor will they work for every small business type. For reference, the following businesses and industries are typically not eligible for BOP coverage because they face additional risks above and beyond what the average small business policy can cover:
- Manufacturers
- Car Dealerships
- Auto Repair Shops
- Bars and Pubs
- Banks and Financial Institutions
- Amusement Parks
This list is not extensive, so if you’re unsure whether you need this policy coverage, talk with your insurance agent to see whether a BOP could work for you.
What Can a Business Owner’s Policy Cover?
Business owners’ policies protect small businesses against a wide range of potential threats and damages. The four most common coverages BOPs offer typically include commercial property insurance, general liability insurance, business income insurance, and crime insurance.
Commercial Property Insurance
Commercial property insurance protects your building, equipment, and inventory. It is especially useful if your property is vandalized, stolen, lost, or accidentally damaged by a weather event.
General Liability Insurance
General liability is, perhaps, the biggest defense small businesses have, so it’s always included in a BOP policy. It covers a range of medical expenses, bodily injuries, and property damages that you or any one of your employees is legally responsible for. Additionally, it can cover the costs associated with lawyers and legal fees.
Business Income Insurance
Suppose your business has to close temporarily due to vandalism, theft, or a covered weather event. In that case, business income insurance can help you continue paying rent, electricity, and other bills, including employee salaries.
Crime Insurance
Crime insurance mainly protects your business from fraud, theft, and forgery.
Additional BOP Coverage Options
In addition to these four key coverages, business owner’s policy protections may also include some or all of the following coverage options:
Accounts Receivable
If you have unpaid invoices, your BOP policy can protect you against any associated losses.
Cyber Liability
Cyber liability protects your business from damages related to attacks on your computer systems or electronic data.
Equipment Breakdown
If your business uses equipment, including computers and other technology, equipment protection can help you cover the costs of replacements or repairs if your equipment breaks or is destroyed.
Personal and Advertising Injury
Personal and advertising injury protects the integrity of your business by protecting you against copyright infringement, libel, and slander.
Rented Vehicles
If you lease, hire, or borrow any vehicles for your business, BOP insurance can help offset any associated costs.
Employment Practices Liability
Employment practices liability can protect you against any related liability if any employment process results in wrongful acts.
What Isn’t Covered Under a Business Owner’s Policy?
While business owners’ insurance policies cover a wide range of damages and potential claim types, there are a few damages and insurance options that BOPs do not typically cover. These include worker’s compensation, professional liability, commercial auto policies, flood and earthquake insurance, and employment practices liability.
Suppose claims relating to employee injuries, professional or business negligence, business-related driving accidents, flood damage, earthquake damage, or discrimination are brought against your company. In that case, your BOP policy will not protect you. You will need additional coverage options to ensure you’re fully insured.
Talk to Your Agent About a Business Owner’s Policy Today!
BOPs are the backbone of a small business’s insurance options. They provide a solid basis of coverage that can be supplemented with any additional policy types you may require to ensure you get all the protection you need.
If you’re interested in a business owner’s policy, talk with one of our top-tier insurance agents today.
FAQs
1. What is a Business Owner’s Policy (BOP)?
A Business Owner’s Policy (BOP) is a bundled insurance package that combines general liability, property insurance, and business interruption coverage into one policy.
2. What types of businesses need a BOP?
Small to medium-sized businesses, such as retail shops, restaurants, and professional offices, often benefit from a BOP due to its comprehensive protection and cost savings.
3. Does a BOP cover employee injuries?
No, a BOP does not cover employee injuries. Workers’ compensation insurance is required for employee-related claims.
4. Can I customize a BOP for my business?
Yes, many insurers offer optional coverages, such as data breach protection, equipment breakdown, or professional liability, to tailor the policy to your business needs.