What is a Business Owners Insurance Policy?

A business owners insurance policy, which is also known as BOP insurance, is a policy that combines business liability and property insurance in one easy to purchase package. It is a popular coverage with small and medium sized businesses. It can be useful for businesses such as retail stores, contractors, restaurants and even wholesalers. 

Just like your home and car, a business needs to be protected with insurance. There are numerous policies that a business owner can choose from and depending on what type of business you have your coverage needs can vary. However, most businesses absolutely need to carry liability and property coverage and a BOP combines those coverages, making it easy to protect your business with these essential coverages. 

What a BOP Covers?

A business owners policy includes two primary coverages but can include many others:

Liability: General liability helps cover costs related to medical bills, repair bills and lawsuits if a customer is injured or damage occurs to a person’s property. As an example, a wet floor results in a customer falling which leads to an injury. General liability will pay for their medical bills as well as any lawsuit costs if the customer decides to sue. 

It will also cover damage to another person’s property. If a sign falls off your building, damaging someone’s car, general liability will cover the damage and any lawsuits. Product related claims are also covered, so if your product ends up injuring a customer, this insurance will help protect your business. 

The liability coverage in a BOP policy does not cover injuries to yourself, your employees or business property.

Property Damage: The commercial property insurance included in a BOP policy can protect your business property against both minor and major incidents. As an example:

• Fire destroys your building and the contents 
• Burst water pipe damages your building or valuable documents
• Windstorm damages your outdoor sign

Commercial property insurance can help protect the following: 

• Building 
• Outdoor sign 
• Furniture and equipment 
• Inventory 

It should be noted that property damage coverage does not protect against flood damage or earthquake damage so if your business is located in a high-risk flood or earthquake prone area you will need a separate policy or endorsement on your BOP to protect against these perils. 

Other Coverages

One of the best things about a BOP policy is that it can be customized to include a variety of coverages to protect your business. Here are just a couple of additional protections you can add to a BOP policy:

Business Income Insurance: This coverage can help cover bills and payroll if your business is forced to close temporally due to a covered cause of loss. It can replace your net income that is lost during the period your business is being rebuilt or repaired after a covered loss. It can also cover operating expenses, payroll and even relocation costs if you have to set up a temporary location. 

Equipment breakdown coverage: Broken equipment affects productivity and this coverage will help with expenses or lost income that occur due to equipment breakdown. This can include a number of issues, just a few examples:

• Computer network damaged by a power surge
• Electrical system problems
• Production equipment breakdowns

Coverage can vary by policy, but a few examples of coverage include:

• Breakdowns caused by power surges
• Motor burnout, 
• Boiler malfunction 
• Equipment damage due to operator error

These are just two examples of additional coverages available with a BOP policy, there are many more that can be added to a policy to customize it for your particular business. A few more examples include:

• Errors and omissions
• Food contamination for restaurants
• Liquor liability for businesses that serve alcohol
• Cyber liability and data breach expenses