Is a Business Owners Policy Right for You?

Is a Business Owners Policy Right for You?

May 2017
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As a business owner you face risks no matter what your business size, industry, or specialty. But some businesses face much fewer risks than others. If your business needs basic commercial insurance protection at an affordable rate, a Business Owners Policy (BOP) may be the perfect solution.

What is a BOP?

A Business Owners Policy (BOP) is an insurance package that combines basic coverages that a small to mid-sized business needs into one ready-made policy. Because a BOP combines multiple coverages into one ready-made policy, the premiums are typically more affordable than the total cost of the individual coverages. BOPs are ideal for low-risk businesses that want affordable protection against the most basic and common business risks.

What Does a BOP Cover?

Business owners policy include coverage for property insurance, liability protection, and business interruption coverage.

Property Insurance

A BOP protects the building your business uses to operate and the physical property your business owns, such as inventory, equipment, materials, and supplies. Even if you lease your business space, property coverage can help protect your financial investment against common risks, such as fire, theft, and vandalism.

Business Interruption Coverage

40% of businesses won’t reopen after a disaster. Business interruption coverage can cover the loss of income from a fire or other catastrophe that interrupts your business operations.

Coverage includes:

  • Lost revenues due to closure
  • Costs of operating from a temporary location
  • Fixed expenses (rent, utility costs)

Liability Coverage

The most basic coverage of all is liability protection, which covers your business’ responsibility for harm or damage to others. Liability protection covers your business against claims and costly lawsuits from:

  • Third-party bodily injury
  • Medical bills
  • Third-party property damage

In today’s litigious society, protecting your business against third-party claims is a necessity. Liability coverage protects your business in the event someone is harmed as a result of your business operations.

A Business Owners Policy takes all three of these basic insurance coverages and packages them together to protect you from the most common risks you face as a business owner.

What’s Not Covered by a BOP

Business Owners Policies don’t cover all risks, however. They don’t cover professional liability, auto insurance, workers compensation, or health insurance, for example.

Coverage not provided by a BOP:

  • Professional Liability Insurance
  • Employee Practices Liability Insurance
  • Business Vehicle Insurance
  • Workers Compensation
  • Health and Disability
  • Flood and Sewer Back-up
  • Cybersecurity Insurance
  • Terrorism Insurance

What are the Benefits of a Business Owners Policy?

BOPs allow you to pick coverage that matches your business size. Small businesses are most-likely to benefit from a BOP. If you have fewer than 100 employees and revenues less than $5 million annually, a BOP may be the perfect solution for your business.

BOPs are affordable. Because a BOP is a single prepackaged policy, it can be more cost effective than buying three separate policies.

BOPs are customizable. Additional coverage can be added to your BOP in the form of endorsements or riders. Depending on your business needs, you may choose to add coverage to your policy for:

  • Earthquake coverage to protect your building against seismic activity
  • Electronic commerce coverage for e-commerce companies
  • Employee dishonesty coverage to protect against employee theft
  • Food contamination coverage to protect businesses who sell food/ beverages
  • Personal effects coverage to extend your coverage to personal property

Is a BOP Right for You?

If you own a small business with limited risks, a BOP may be the perfect solution to protect your business.

  • Do you operate a business out of your home?
  • Does your business operate from a physical location?
  • Do you have physical assets such as inventory, tools, materials, equipment, or supplies?
  • Do you operate a small business with a few employees?
  • Does your business bring in less than $5 million in annual revenue?
  • Is your business low-risk?

Not all businesses will qualify for a BOP, even if they are considered “small businesses.” Certain business classes are ineligible for these prepackaged policies. Contact your insurance provider today to find out if a BOPs affordable coverage is right for your specific business needs.


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