Understanding a Business Owner Policy

23 December 2020
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A Business Owner’s Policy (BOP) is a policy that combines coverage from property and liability risks that is primarily designed for small and medium sized businesses. If you have face-to-face interactions with customers and you own or rent the space where you conduct your business, there is a high probability that you will need a business owner’s policy (BOP).

BOPs help business owners by conveniently bundling insurance policies that a majority of business owners need. It also makes it more affordable than having to purchase individual insurance policies.

What Does BOP Cover?

A typical business owner’s policy provides coverage for commercial property, general liability and business interruption.

1. Commercial Property Coverage

This coverage can protect you when your business property or equipment gets damaged or stolen. Your commercial property policy should be able to cover the costs of your property and/or equipment, for either repair or replacement.

This section of a standard BOP covers the following:

  • Buildings located at the address listed in the declarations. It includes equipment and machinery that is permanently installed.
  • Improvements made by tenants
  • Property that belongs to other people (if you are renting)
  • Personal property that is used by the business located in buildings that are covered.

2. General Liability Coverage

General liability should be a priority for all businesses. A General Liability policy should be able to cover:

  • Personal and advertising injury liabilities
  • Bodily injury and property damage liabilities

A BOP includes medical payments coverage, which will pay for medical expenses for injured individuals as a result of business activity.

3. Business Interruption Coverage

Also known as business income coverage, Business Interruption Coverage, can protect your business from theft vandalism or damage by a natural disaster. It is important to be aware that this type of coverage will not cover the loss of income should your business need to stop operations for a period of time.

A standard business interruption policy helps companies to pay for business overhead costs provided that the reason for business shut down is within the policy.

Requirements for BOP

Not all businesses can qualify to avail for a business owner’s policies. This is due to their size and nature of their operations. Larger companies will see more benefits if they purchase a variety of individual insurance policies that are specific to their needs and based on their risk profiles.

Businesses must meet certain criteria to qualify for BOP coverage. These criteria vary from one insurer to another – insurance carriers will have different requirements regarding business location, the size of the location, number of employees, yearly revenue and the class of business.

Flexibility of a Business Owner’s Policy

Business owner’s policies can be customized according to your business’ unique needs. Common additions are:

  • Data breach insurance (also known as cyber liability insurance)

This policy helps retail stores recover when a data leak exposes confidential data like credit card numbers.

  • Hired and non-owned auto insurance

This insurance covers personal or leased vehicles that a business owner uses for commercial purposes, like deliveries or visiting clients.

  • Errors and omissions insurance

This insurance policy protects businesses in the case that a customer disputes the quality of a service.

Purchasing a BOP insurance policy is a smart move for small to medium sized business owners. It is cost effective compared to purchasing individual policies and simplifies the process of choosing the different coverages that are most often needed by businesses including protections against theft, loss of income, and damages due to weather and vandalism.

Our team of inhouse insurance professionals can help business owners like you find the optimal BOP insurance policy. Get in touch with us to get a quote with the best business owner’s policy created for your business!

Chris Tracy

VP – Northern California

Chris is a VP Northern California at Inszone Insurance Services. His interest in commercial insurance was piqued in the summer of 2010 during an internship with Zurich North America where he came to appreciate the reward of helping businesses understand and defend themselves from risk. Given his background handling claims for Commercial Middle-Market, Global Corporate, and Large Construction accounts, he is able to provide unique insight to clients. Prior to his time in the commercial insurance field, his interest in human behavior culminated in the attainment of a Master’s Degree.

When Chris is not working, he enjoys spending time with his family and friends, losing golf balls every way imaginable, trying new wines, and hiking.

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