Business Owners Policy:

Everything your business needs

Business owners have invested their time and hard-earned money into making the business successful. An unfortunate event or loss could shut all that down, If you need insurance coverage for multiple risks in one package, you should consider a business owners policy (BOP). You wouldn’t want to see a simple mistake end up in a lawsuit against you. The only solution to get financial protection against hefty lawsuits is by opting for a business owners policy.

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What is a business owners policy?

BOP insurance is a packaged policy designed for small and mid-sized businesses. If you own a store, building, or a similar business entity, you should opt for a business owners policy. Having a BOP will protect you from having to pay out of your pockets from property damage to loss of business content. According to Forbes, the business owners policy is a must-have insurance for all small businesses. 

BOP policy is an enhanced policy that combines the following insurance policies-

  • Commercial general liability insurance:
    General liability insurance covers the cost of lawsuits arising due to bodily injury, property damage, and personal injury caused to the third party. CGLI also covers the cost of defending lawsuits against your business.
  • Commercial property insurance:
    Commercial property insurance will help protect the building as well as the assets that your business uses. Property insurance will pay for the repair or replacement of your property in case it is lost, stolen, or damaged.
  • Business interruption insurance:
    Business interruption insurance covers the lost income when your business has to shut down temporarily due to vandalism, theft, or covered perils.
    For property and interruption insurance components, you have a choice between named perils or open perils coverage.
  1. Named perils: The perils explicitly mentioned in the insurance policy like fire, and lighting are named perils. The insurance will not cover any additional losses apart from the ones mentioned in the policy.
  2. Open perils: The perils that cover all the physical losses and damages unless specifically excluded are known as open perils. Some standard exclusions are animal or insect infestations. Since open perils include a large area of losses, the premiums are also higher.

Getting a business owners policy for your business is convenient and affordable than getting these policies separately. If your business deals with several risks in their day to day operation, you must opt for the BOP. Some of the risks you might face while conducting business operations which are covered by the BOP are:

A customer slips and falls that cause physical injury. Liability insurance covers the damages. According to Find Law in order to receive a claim against slip and fall cases, the injured party must prove that the possessor of the property was aware of the dangerous conditions.

  1. Your inventory gets stolen or spoiled. Property insurance covers the damage.
  2. Your business has to relocate due to covered perils. Business interruption insurance covers the damages.

The different components of the business owners policy cover various risks. Similarly, the limits for each element also differ.


  1. General liability insurance limit is separated into “per-occurrence- each individual loss throughout the year” and “per year- combined loss during the policy year” limit.
  2. The commercial property insurance limit is determined by the value of the property that your business owns and wants to secure.
  3. Business income insurance limit is determined by adding the net profit and any fixed expenses over the amount of time your business would reopen after an accident.

Are you looking for a policy to cover multiple risks in one package?
Get personalized business owners insurance quotes from our wide range of carriers today.

What does a business owners policy cover?

Business owners policy insurance coverages include:

  1. Property damage:
    Property insurance covers all the damages done to the property and its assets from any workplace accidents. For example, a water pipe bursts in your store, and the inventory stored in the room is ruined, BOP will cover for the financial loss caused by the property.
  2. Bodily injury (Third party):
    Liability insurance covers all the injuries that any third-party encounters on the business premises. For example, your staff was cleaning the floor and one of your clients accidently slipped and got injured. They can sue you for bodily injury, but BOP will help you cover the financial losses against the lawsuit.
  3. Lost income:
    Business income insurance covers your income up to 12 months in case your business has to close due to covered perils temporarily. For example, your building is non-functional due to fire, which forces you to close down your business. Business interruption insurance will cover the lost income and continuing expenses while the building repairs.
  4. Libel and slander:
    In case your competitor sues you for causing harm to their reputation because of something you said, be it written or oral, BOP can help you cover for the damage.
    According to  New York Timesapproximately 40% of business owners have no insurance at all. When faced with any lawsuit or disaster, many businesses have to shut down their business to cover the losses.
  5. Theft and vandalism:
    BOP covers the cost of repairing and replacing your business property after it’s stolen or damaged.

Some policies you might want to consider for your business:

According to the nature of your business, some of the coverages you can add to your BOP insurance are:

  1. Workers compensation insurance:
    Workers compensation insurance is mandated by most states (except Texas) for businesses with employees. This insurance covers injuries and illness that employees might face during the work.
  2. Professional liability insurance:
    Professional liability insurance covers the legal fees against client lawsuits for negligent acts. This insurance is also known as errors and omissions insurance.
  3. Commercial auto insurance:
    If your company owns any vehicle for conducting your business operations, you must take commercial auto insurance to protect your vehicles.
  4. Employment practices liability insurance:
    Employment practices liability insurance guards your business against any claims of discrimination to the employees.
  5. Inland marine insurance:
    If your business deals with transporting goods and equipment from one place to the other, you must protect them. Inland marine insurance covers your property during transit.
  6. Commercial umbrella insurance:
    If the claim maxes out the coverage limit of your general liability insurance, commercial umbrella insurance fills the gap and provides an extra layer to the existing policy limit.
  7. Event insurance:
    If your business hosts events regularly or is an event planning company, you should get event insurance.
  8. Cyber liability insurance:
    BOP insurance doesn’t protect against cyber-attacks and data breaches. The appropriate policy to cover cyber-crime is cyber liability insurance.

Are you looking for a policy to cover multiple risks in one package?
Get personalized business owners insurance quotes from our wide range of carriers today.

Some common endorsement and exclusions you must consider:

The business owners policy is often called commercial multi-peril policies. You can add optional coverages to ensure that your business covers all the primary risks. Some endorsements that you can add to your business owners policy are:

  • Computer equipment
  • Account Receivable
  • Hired/non-owned auto
  • Medical and dental office endorsement
  • Increased fine arts coverage
  • Earthquake protection

While the business owners policy offers a wide range of coverage, there are still few limitations. BOP does not cover the following coverages:

  1. Specific claims that arise from the services you provide.
  2. Damage to the client because of the advice you provide.
  3. Professional errors.
  4. Employee injury.
  5. Employee discrimination lawsuits or fraud filed against your company.
  6. Bodily injury to employees.
  7. Vehicles used for business.
  8. Failure to protect sensitive information.
  9. Crime coverage.
  10. Any loss due to earthquake.
  11. Disability insurance.

Types of insurance that includes the business owners policy:

  1. Contractors insurance
  2. Landscaping insurance
  3. Handyman insurance
  4. General contractor insurance
  5. Accounting insurance
  6. Beauty insurance
  7. Construction insurance
  8. Engineer insurance
  9. Truck insurance
  10. Art insurance
  11. Food business insurance
  12. Restaurant insurance
  13. Food truck insurance
  14. Hotel insurance
  15. Consultant insurance
  16. Photography insurance
  17. Pet business insurance
  18. Real estate agent insurance
  19. Gas station insurance

Multiple factors that determine a business owners policy cost are:

The factors that determine the value of the business owners policy are as follows:

Coverage limit:
The coverage limits on your BOP insurance policy directly impacts the cost. Usually, BOP for small businesses have a limit of two million. This means the BOP will provide one million in coverage per claim and two million aggregate amount over the lifetime of the policy.

Claims history:
If your company has a claim history, you will have to pay a higher premium rate than a company with no claim history.

Higher risk industries have to pay higher premiums.

Size of business:
Businesses with more employees and revenues are exposed to more risks. Therefore, depending upon the size of your business, you require a more comprehensive coverage.

Value and type of property:
The higher the property value, the higher the insurance coverage you will need. If the property you want to insure is challenging to replace, the business owners’ cost will differ.

Business location:
The geographical location of your business will also impact the insurance rates. If the area of business is prone to natural disasters the premiums costs are higher.

Replacement cost VS actual cash value:
The price varies on how you choose to insure your business property. You can protect your property as per its replacement value (cost when the property is new) or for its actual cash value (cost of the property after depreciation).

It is crucial to know the worth of the business personal property while determining the BOP insurance cost. The amount will help you determine the coverage your business needs to cover the cost of replacing or repairing goods. According to the Department of Revenue, business property is valued based on commercial property and industrial property.  

Adding any additional coverages will increase the cost of the BOP. The more coverages you add, the more the price. But overall, adding policies to your BOP insurance is cheaper than taking standalone policies. According to Investopedia, a business owners policy is usually sold at a premium, which is less than the total cost of individual coverages.  

Frequently asked questions about business owners policy:

Some of the commonly asked questions about BOP insurance are: 
If I have a business owners policy, do I need to purchase liability insurance or property insurance separately?

Insurance for business owners combines general liability insurance and commercial property insurance into a bundle. Therefore, you don’t have to purchase liability insurance or property insurance separately if you purchase a BOP.

Do I need a business owners policy?

You should consider having a BOP if:

  • Your business has a physical location.
  • You have business assets that need protection.
  • There is a possibility of you facing a lawsuit.
  • You have less than 100 employees.
  • The business owners policy is designed for small to mid-sized businesses.

Accidental injuries is the third leading cause of death in the U.S according to the National Safety Council. Therefore, you must opt for BOP insurance because accidents can happen anytime.

Does the law require a business owners policy insurance?

Business owners insurance is not mandated by law. As it is a combination of CGLI and property insurance, some of the clients may want to see the insurance policy before signing a contract.

Does BOP provide coverages against social media risks?

The general liability insurance in your BOP covers advertising injury. If there is any lawsuit filed against you for copyright or brand infringement, BOP will cover you.

Who is covered by the business owners policy?
BOP is mainly for:

  • Businesses and employees
  • Parties to a contract
  • Suppliers
Can I combine other entities on my insurance policy under named insured?
If you have similar ownerships and operations, you can combine other entities as named insured. It is advisable to contact the insurance advisor for the same.
Does a business owners policy have a deductible?
Since BOP is a combination of property insurance, liability insurance, and business income insurance, the deductibles also vary.

  • The liability component of the policy doesn’t have a deductible.
  • The property component of the policy has a deductible. The higher the deductible, the lower your insurance premium.
  • The business income component of the policy doesn’t have a deductible. But has a waiting period of 24-72 hours. The insurance company will not pay losses incurred during the waiting periods.
Is it necessary to have a coinsurance clause added to BOP?
If your property insurance limit is far below the actual value of the property, having a coinsurance clause will help you reduce the claim payment to your company. Therefore, it is common to have a coinsurance clause.
Do all companies qualify for business owners policy?

Business insurance policy can be custom made to fit the industry-specific business. Not all companies qualify for a BOP. According to the Insurance Information Institute, any business that has less than 100 employees, generates less than $1 million annually and operates in a low-risk industry can qualify for a BOP.

Are you looking for a policy to cover multiple risks in one package?
Get personalized business owners insurance quotes from our wide range of carriers today.