Business Owner's Policy

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Decoding a business owner’s policy

Having a small business is no cake walk. Among several business management functions like planning, organizing, staffing and directing, a business owner is also responsible for the holistic protection of the organization. A Business Owner’s Policy (BOP) is the ideal insurance for small business owners. You can obtain comprehensive coverage of general liability and commercial property at a bundled rate.

Small businesses can incur unexpected financial losses which are ultimately deducted from the business’s bottom line. A BOP joins various insurance lines for small businesses and creates a package perfectly suited to their business type. The insurance typically includes protection against third party liabilities such as client injury or property damage and coverage for commercial property such as office furniture and equipment used for business purposes.

It is imperative for the business owner to be aware of the inclusions and exclusions of this policy.


The property insurance of standard BOPs only cover the damage caused by certain perils like fire, explosions, wind damage, vandalism and smoke damage while the special form BOPs offer coverage for all risks other than what is specifically excluded so it is important to read the exclusions even if that is to the only part of the policy that you actually read! The liability coverage provides defense for claims or lawsuits resulting from bodily injury or property damage resulting from your business operations.  There are also exclusions under the liability section that should be reviewed.  


A standard form BOP does not provide coverage for theft.  On the liability side, a BOP also excludes coverage for employment practices, cyber liability, employee injury, auto and in most cases, professional liability.

Eligibility Requirements

Business owners must note that only small to mid-sized business ventures are typically eligible for this kind of policy. The eligibility requirements for a BOP differs among providers. Lower risk, main street type businesses like retail stores, barber shops, printers, cafes, computer stores, and offices risks are typically eligible for Business Owner’s Policy.

Fundamental Requirements

  • The business should be in a low-risk industry.
  • Depending on the carrier a business should have less than a set maximum amount of revenue or payroll.
  • It is recommended to include 12 months of Business Income Insurance including extra expense.

Insurance companies are stringent about the eligibility requirements, although, the maximum annual revenue and payroll amounts may vary from company to company. Many business types are not considered eligible for BOPs due to the nature of their operations being considered a higher risk. When a business is ineligible for a BOP, there are always other options such as a mono-line general liability or another type of package policy that are available to meet a business’s need.

Why do you need BOP?

A Business Owner’s Policy provides the trifecta of business protection – Commercial Property Insurance, General Liability Insurance and Business Interruption Insurance. Some BOPs offer optional coverage such as employee dishonesty coverage, mobile equipment and on a limited basis, professional liability (barber, beauty salon, printer) depending on the business situation. The coverage components are flexible to meet your business protection needs.

Breaking down the coverage

Business Owner’s Policy provides extensive coverage with added benefits of customization and flexibility. It presents to you a combination of vital coverages- Commercial Property, General Liability and Business Interruption Insurance. You may also have the ability to add optional coverages and tailor the policy to your small business needs.

An in-depth explanation of the coverage with practical examples will help you gain a better understanding of the policy.

Commercial property insurance

Commercial Property Insurance helps protect your business’s physical assets. When damage occurs to owned property due to a covered peril, the insurance company will reimburse the business for the loss in exchange for a set amount of premium.  If your restaurant kitchen catches fire, your location loses a roof during a hurricane or your business is burglarized-all of these incidents would be covered losses with the right business policy in force.

General liability insurance

Even when a claim or lawsuit is groundless, a business encounters the costs to investigate and possibly pay negligence claims. Bodily injury and property damage losses that arise from business operations, completed projects or product liability are examples of possible claims or lawsuits. General liability insurance will pay for your legal defense and judgments awarded for covered losses. 

Business interruption insurance

Business Interruption Insurance mainly replaces income lost due to direct damage to a covered location causing the business to close. For instance, the roof may be blown off during a hurricane, not only the roof but the entire interior space is damaged and contents ruined. Many businesses do not survive after a major property loss or supply chain disruption. Lost revenue, day-to-day ongoing expenses like payroll for key employees, expediting replacement equipment, and relocation to a temporary space are just some of the things that this type of insurance will cover. Business income coverage can help get your business operational and profitable again.

Why approach us?

The BOP is one of the most flexible insurance policies in the industry. Selecting customized coverage for your business can be challenging. Tell us about your business and our licensed agents will make recommendations for a policy most suited to your specific business needs. Since BOPs can be tailored based on your priorities, we will guide you to find appropriate insurance at an affordable cost. Consult with our professionals to get advice on purchasing the right policy today!

Key takeaways

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