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 exactly 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 that 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 on their own, which makes a BOP a cost-effective option for small businesses.

Who Needs a Business Owner’s Policy?

From retail stores 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 of your home, has fewer than 100 employees, makes less than five million dollars in annual sales, and has property or equipment that requires insurance protections.

Note that 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 about whether you need this policy coverage, make sure to 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 work to protect your small business 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 works to protect your building, equipment, and inventory. This comes in handy especially 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

If your business has to close temporarily due to vandalism, theft, or a covered weather event, business income insurance can help you continue to pay for rent, electricity, and any 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 any unpaid invoices, your BOP policy can step in to 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 operates with the use of any 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

If any of your employment processes result in wrongful acts, employment practices liability can protect you against any related liability.

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.

This means that if claims relating to employee injuries, professional or business negligence, business-related driving accidents, flood damage, earthquake damage, or claims of discrimination are brought against your company, 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’re getting all of the protection you need. 

If you’re interested in a business owner’s policy, talk with one of our top-tier insurance agents today.