Business Owners Policy Coverage Guide
A Business Owners Policy (BOP) combines essential coverages, such as general liability, property, and business interruption insurance, into a single, cost-effective package tailored for small and mid-sized businesses.
Business owners policy insurance: what to know
A business owner policy (often called a BOP) is a popular insurance package for a number of home-based, small and mid-sized businesses. It is often a combination of business property and general liability coverages, and typically costs less than when each policy type is purchased separately.
While it may not contain all the insurance coverage types necessary to operate your business, most small businesses that own or rent business space or equipment could benefit from a BOP.
Read on to learn more about this versatile and convenient form of business insurance, including what it covers, who is eligible and where to find it. Â
What does a business owners policy cover?
The primary benefit of a BOP is the convenience of combining multiple insurance types into one policy. This typically includes general liability and business property coverages, which, when purchased together, are often cheaper than when purchased separately.Â
Coverages falling outside this policy type can typically be added à la carte through endorsements, depending on your specific business needs.
Liability insurance is crucial for any business. Liability protection covers bodily injury and property damage to customers, as well as advertising injury. Such coverage can protect you and your business if someone outside your company sues you for damages to your business or services.
Damages covered by commercial general liability coverage:
- Bodily injury liability
- Property damage liability
- Personal injury
- Advertising injuryÂ
- Medical payments
- Damage to premises rented by your business
- Products — completed operation (goods you produce or sell)
For some business insurers, the main difference between business owners policy general liability coverage and that of a standard business policy is that the business owner plan typically has a combined liability limit for personal and advertising injury, while a standard plan will usually split these out into separate coverages.Â
This portion of the policy covers property damage to any of the physical property related to your business, including product inventory, business equipment and the physical space itself. Basically, any property used by your business is likely to fall under this category, aside from vehicles. As with a homeowners policy, however, be aware that your business property coverage has some exclusions, including earthquakes. Confirm any such exclusions ahead of time so you can add necessary endorsements, if available.Â
Getting commercial property insurance through a business owners policy comes with certain advantages. For example, most BOP policies include extra expenses and business income coverages. Also referred to as business interruption insurance, this can be crucial to staying afloat after suffering a covered loss, as it can help prevent a loss of income. In some cases, limits for certain coverages can also be higher than standard coverage forms, including for circumstances such as loss of electronic data.
What isn’t covered by a business owners policy?
While a business owners policy covers many basic business insurance needs, it won’t cover everything.[1] For instance, businesses with employees must still carry workers compensation, which isn’t included in a BOP. Establishments that serve alcoholic beverages will likewise need to look into liquor liability to ensure proper coverage. Some of these coverages may be added to your business owners policy as an endorsement, while others may require the purchase of a separate policy.Â
Your business owners policy may also exclude certain perils, including earthquakes and floods. Earthquake coverage may vary depending on which state you live in. For flood insurance, The Zebra partners with Neptune Insurance to provide coverage options specifically designed for those with commercial needs. Neptune flood insurance allows for larger coverage limits than a National Flood Insurance Program (NFIP) plan and also offers up to $25,000 in business interruption coverage ($500 per day for up to 50 days).Â
Get a flood coverage quote today from Neptune Flood Insurance.Â
Home-Based Business Insurance: What to Know | The Zebra
Homeowners insurance offer limited coverage for home-based businesses. Explore options like endorsement or separate business policies to protect yourself.
Do you need a BOP?
Business owners policy insurance is a great option for many small businesses.[3] These include home-based businesses and freelancers, especially those who have valuable business equipment.
In general, combining both general liability and property coverage under the plan is a great way for many businesses to save money and cover many of their insurance bases with one simple policy.Â
To be eligible for a BOP, businesses must usually meet requirements for both annual income and the total number of employees. Below are some examples of businesses that most commonly benefit from a business owners policy:Â
- Self-storage facilities*
- Retail stores
- Apartment buildings
- Convenience stores/gas stations
- Grocery stores
- Smaller office buildings (usually no taller than six stories)
- Small motels (usually no taller than three stories)
- Wholesalers
- Contractors**
*Self-storage businesses with outdoor vehicle storage are ineligible for this coverage.
**A number of restrictions apply, including caps on annual payroll and building size.
Very small businesses (those with fewer than four employees) could even be eligible for what’s called a micro-business owners policy (micro-BOP). This policy type is more stripped down, typically covering only property loss. These policies may not be available from every insurer.
Business owners policy (BOP) eligibility
A business owners policy isn’t the right fit for every company. These bundled plans are designed for smaller, lower-risk businesses, not large corporations that need more specialized coverage. Because of that, insurers often limit who qualifies for a BOP.
Eligibility rules can vary depending on the insurance company, but most businesses that qualify share a few traits:
- Annual revenue under $1 million
- Business space under 35,000 square feet
- A lower-risk industry (for example, a retail shop, small restaurant, or office-based business)
- Fewer than 100 employees
If your business is larger, operates in a high-risk field, or has multiple locations, your insurer may recommend separate policies instead of a BOP to ensure you’re fully protected.
Business owners policy insurance cost
What you pay for your business insurance policy will be largely based on the type of business you operate. Some business types are inherently more prone to risk than others. However, Progressive reports the average cost of businesses purchasing business owner policies through its business program was around $84 in 2020.Â
Businesses with a high number of employees or added risks are likely to face higher costs, as are business owners with a history of making claims. The best way to see how much a BOP would cost for your business is to reach out for a quote. Get a quote from our partners at Bold Penguin to find out more.
Business owners policies: considerations
BOP insurance can be a great way to find savings and cover many of your insurance needs in a single policy form. While other coverages may be required, make sure to ask your insurance agent about endorsements to help you customize coverage to better fit your specific needs.[2]Â
Getting insurance coverage for your business doesn’t have to be difficult. Get a quote from Bold Penguin today.
Reach out to our friends at Bold Penguin for a quote today
Business owners policy coverage guide FAQs:
About The Zebra
The Zebra is not an insurance company. We publish data-backed, expert-reviewed resources to help consumers make more informed insurance decisions.
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