Paige Cerulli Last Updated On: May 23, 2024

What is a Business Owner’s Policy?

As a business owner, chances are you’ll need several types of insurance policies to fully protect your business. A Business Owner’s Policy (BOP) combines policies to simplify your insurance and save you some money.

A BOP insurance policy combines business property and business liability insurance for more comprehensive coverage. Business liability insurance covers claims of property damage and bodily injury to others, such as if a customer were to fall and injure themselves while in your store. Business property insurance helps to cover losses to your business property from events like fire or theft.

Some BOP insurance companies also include business interruption insurance in the coverage. Business interruption insurance helps to replace lost income if your business has to slow or pause its operation, such as after a theft or a covered natural disaster.

Together, these policies help to protect you from several major, common threats that could cost you tens or hundreds of thousands of dollars in legal fees, damages, or financial losses.

Table of Contents

Why is a Business Owner’s Policy Important?

Owning a business comes with certain risks, and no matter how careful you are, you can’t eliminate those risks. BOP coverage helps to protect your business from those risks, and it can apply to many different situations:

  • Your employees accidentally damage a client’s property
  • A customer slips and falls while in your store, and is injured as a result
  • Your business tools, equipment, digital property, or inventory are stolen
  • Your business’s physical location is damaged by an event like a fire or a covered natural disaster
  • Your business loses customer personally identifiable information and needs to notify the customers affected

Your business is robbed and inventory is destroyed, so you have to pause operations for six weeks while you rebuild inventory

What Does Business Owner’s Policy Insurance Not Cover?

While a BOP covers many potential risks, the following elements aren’t typically covered:

  • Workers who are injured while on the job
  • Claims of negligence against your business
  • Car accidents that happen while you’re driving your vehicle for business purposes
  • Damage caused by floods or earthquakes
  • Claims of employer discrimination

Other types of insurance, such as workers’ compensation, professional liability, and commercial auto insurance, can help protect you from these types of risks. Depending on the company that you purchase your BOP insurance from, you may be able to add on these additional coverages and potentially save money by buying multiple policies from one insurance provider.

Who Qualifies for a Business Owner’s Policy?

BOP insurance policies aren’t available to all businesses. They’re intended for small- and medium-sized businesses. Every insurance provider has their criteria for granting BOP insurance policies. Typically, to qualify for BOP insurance, a business must:

  • Operate in a low-risk industry
  • Have fewer than 100 employees
  • Generate less than $1 million in annual revenue
  • Operate in a small commercial space

Businesses that qualify for BOP insurance are often small restaurants, office-based operations, retail stores, convenient stores, condo associations, landlords of apartment buildings, wholesalers, and warehouses. Businesses that are considered higher risk, such as auto repair shops, bars, and banks, often don’t qualify for this type of coverage.

How Much Does a Business Owner’s Policy Cost?

The cost of your business owner’s insurance policy depends on several different factors:

  • Your desired coverage limits
  • Your industry (you’ll pay more if you’re in a higher-risk industry)
  • The type and value of your business property and how difficult it is to replace
  • The location of your business
  • The age of your business (premiums are often higher for new businesses)
  • The size of your business and the number of employees you have
  • Your claims history

Getting a personalized quote will give you the most accurate idea of what your BOP premiums will cost. You can get a free personalized quote today and start comparing rates.

FAQ

When you shop for a BOP insurance policy, you can choose from certain coverage limits. Most small businesses will opt for $1 million in coverage per claim and $2 million in aggregate coverage over the policy’s lifetime. Lower coverage limits are available, and you’ll also find BOP insurance with coverage up to $2 million per claim and $4 million aggregate.

As you decide how much coverage you need, you’ll want to weigh your business’ risk factors and think about the industry that you’re in. It’s also important to choose a coverage limit that’s high enough to cover the costs of a lawsuit just in case your business is ever sued.

Yes, BOP insurance is a cost of doing business, so your insurance premiums are likely tax deductible. Be sure to ask your tax professional about how to report those premiums on your tax return.

Yes, you can add coverages or endorsements to your BOP policy to customize the coverage so that it completely meets your needs. Depending on the insurance company that you purchase the policy from, you might be able to add on electronic data liability coverage, business renter’s insurance, employee dishonesty insurance, professional liability insurance, and more.

By buying a BOP, you’ll already be saving money compared to the cost of buying separate business property and business liability insurance policies. You can potentially save more money by bundling any additional coverage that you need. Talk with your insurance provider to find out what other options they offer and what discounts they provide for bundling multiple policies.

You can also save by carefully choosing your coverage limits. While you don’t want to be caught with too little coverage, you’ll pay a higher premium for higher coverage limits.

Take the time to shop around and compare quotes, too. Every insurance provider calculates their premiums a little differently, so it’s important to get personalized quotes to determine which policy is best for your budget and your needs. You can get a business owner’s policy quote today and start exploring your options.


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