Business Owners Policy Guide: What It Covers, Who Needs It, & Cost

Thang Truong
Thang Truong
Updated on:

As a business owner who wants the best for his company, investing in a business owner’s policy (BOP) is the right decision. A BOP is a special insurance policy for business owners that have less than 100 employees or an annual revenue of $5M or less. As important as this insurance is for small business owners, understanding it can be dicey at times. That is why we have written this business owner’s policy guide, to shed some light on the grey areas as regards BOPs. In this article, we will answer all of your pressing questions about BOPs.  

What is a Business Owner’s Policy?

A BOP or a Business Owner’s Policy combines property insurance and liability coverage into one convenient package. It combines the essential coverages required by a business owner into a single package, providing small businesses with the protection that is less expensive than purchasing those coverages separately. It is a standard policy that is typically available to businesses with fewer than 100 employees and generating less than $5M in annual revenue

To better understand what it is, think of a BOP as a bundled value plan or value meal of coverage. Although individual policies can provide these necessary coverages, combining them into a single package that can be purchased as a single unit saves you time and money.

What Does a Business Owners Policy Cover?

A typical business owner’s policy will include commercial property insurance, business interruption insurance, and general liability insurance. 

>>MORE: Business Owners Policy: What It Is, What It Covers, Cost, & Providers

Commercial Property Insurance

The commercial property insurance component of a BOP protects the physical assets of businesses. These assets include equipment, inventory, computers, furniture, business record, building, and so on. It covers only damages caused by events specifically listed in the policy. This includes named perils like fire, explosion, wind damage, vandalism, smoke damage, etc. Some BOPs provide open-peril or “all-risk” coverage; this option is available only through the “special” BOP form, not the “standard” type of BOP.

A standard BOP policy’s property section covers the following types of property:

  • Buildings located on the premises described in the declarations, including permanently installed machinery and equipment
  • Personal property owned by a business that is housed in a covered structure
  • Tenant enhancements
  • Property that belongs to someone else (for instance, if you rent)
  • You own a piece of building glass (or in your custody if you are a tenant)

>>MORE: The Best Commercial Property Insurance Companies

General Liability Insurance

The general liability component of a BOP requires the insurance company to cover the insured’s legal liability for any damages inflicted on others. This damage would have to be the result of actions taken in the normal course of business that may cause bodily harm or property damage as a result of defective products, faulty installations, or errors in provided services.

A BOP includes medical payments coverage, which pays for medical expenses incurred by people injured as a result of your business’s activities. In the absence of a lawsuit, medical payments coverage pays injured parties.

A business owner’s policy includes two types of third-party liability insurance:

  • Liability for bodily harm and property damage
  • Liability for personal and advertising injuries

The BOP combines both coverages into a single insurance contract. It also provides some coverage through exceptions to exclusions. Contractual liability, host liquor liability, and damage to rented premises are some examples.

>>MORE: Best General Liability Insurance Companies

>>MORE: Cheapest General Liability Insurance Companies

Business interruption insurance

Business interruption insurance, also known as business income coverage, protects your company if a natural disaster or other covered event disrupts your ability to conduct business. If your company is forced to close at any time, this coverage will compensate you for lost revenue.

When business interruption insurance is included in BOP, the insurer covers the loss of income caused by a fire or other disaster that disrupts the operation of the business. It may also include the additional cost of operating from a temporary location.

>>MORE: Best Business Income Interruption Insurance Companies

Additional protection and special considerations of Business Owners Policy (BOP)

One of the most significant advantages a BOP has is that it automatically comes with several coverages that are typically added by an endorsement to a standard property policy. Depending on the unique circumstances of a business, the owner and the insurance company may make arrangements for additional coverage components. This could include any or all of the following coverages but at a low limit.

  • Extra expense protection
  • Coverage by civil authorities
  • Important papers
  • Coverage of accounts receivable
  • Data in electronic form
  • newly purchased property
  • Computer operations are disrupted.
  • Mold protection

What are the limits of a Business Owners Policy?

While a BOP gives small businesses an easy insurance option that covers most potential problems, it still leaves out lots of potential issues. As a result, business owners will still need a few additional insurance policies for total assurance. Some of these policies business owners need are as follows:

Professional liability insurance

A professional liability insurance policy protects you if you make a professional error. Anyone who gives advice makes recommendations, or represents the needs of others may want to consider purchasing professional liability insurance to protect their business.

>>MORE: Best Professional Liability Insurance Companies

Commercial auto insurance

A vehicle used for business is covered by commercial auto insurance. There is also coverage for hired and non-owned vehicles. This type of coverage will protect you if you are currently renting a car for work or if you are driving your car for work.

>>MORE: Best Commercial Auto Insurance Companies

>>MORE: How to Find Cheap Commercial Auto Insurance

Workers Compensation Insurance

Workers compensation insurance is often required by your state laws. Employees who are ill or injured at work are entitled to workers’ compensation benefits. It will cover medical costs and lost wages for such employees and in exchange, the employees waive their rights to use the employers. If you have even one employee, you must purchase workers’ compensation. In some states, even just one part-time employee, you must have workers comp insurance. Otherwise, your business might be sued and fined.

What are the requirements for a Business Owners Policy?

To qualify for coverage under a BOP, small businesses must meet certain requirements, which vary slightly between insurers. Generally speaking, to qualify for a BOP, your company should meet the following basic requirements.

  • Your company must have a physical location for business. This could be your home, a store, or office space.
  • Your company should have assets that can be stolen, such as products, cash, computers, inventory, and office furniture.
  • A company that is at high risk of being sued.
  • Your company must have fewer than 100 employees and annual sales of less than $5 million.

That said, the following are some companies that will make good candidates for a BOP.

  • Restaurants
  • Religious organizations
  • Manufacturers
  • Auto dealers and repair shops
  • Tree trimmers
  • Technology consultants 
  • Bars 
  • Parking garages
  • Theaters, etc. 

How much does business owners policy (BOP) cost?

Small businesses typically pay from $500 to $2,500 a year for a BOP policy.

Obviously, the cost of a BOP policy depends on several factors: the coverages, the level of coverages, the size of the company, the nature of the business, deductibles, etc.

If you want to get a cheap BOP policy for your small business, be sure to shop around with a few companies or a digital broker so that you can compare several quotes.

Top 4 Business Owners Policy (BOP) Insurers 

CoverWallet: Best place to get and compare multiple BOP quotes 

If getting the cheapest quote for your BOP policy is your primary goal, CoverWallet is a good place to start. They operate as a digital broker as they have relationships with several leading business insurance companies and can obtain quotes from these companies for you to compare and choose the best and cheapest option. They have a positive customer rating in addition to their ‘A’ rating on BBB.

They also provide excellent digital capabilities that will make managing your business insurance policies much more efficient and convenient. The dashboard allows you to manage all of your business insurance policies. In the dashboard, you can download the certificate of insurance, renew the policy, or file a claim.

The Hartford: Best option for start-ups  

The Hartford has been in business since 1810 and serves over one million small business customers, has an A+ rating from AM Best. The company offers an outstanding and comprehensive Business Owner’s Policy.

The company’s BOP combines three policies—commercial property insurance, general liability insurance, and business income insurance—into a single offering designed to save entrepreneurs money. Businesses are protected by commercial property insurance whether they own, lease, or rent, and they can get coverage for the building as well as equipment, inventory, furniture, and fixtures.

The Hartford’s general liability insurance provides coverage in the event of bodily harm or property damage, including libel or slander. Business income insurance fills income gaps caused by the unexpected closure of a business due to a covered cause, allowing you to continue paying rent and payroll.

Hartford also allows small business owners to purchase add-ons to cover specific risks such as data breach insurance, business auto insurance, debris removal, and the loss of valuable paper records.

Liberty Mutual: Overall best

Liberty Mutual was accredited by the BBB in 1931 and has an A+ rating. Liberty Mutual is one of the best providers of business owners’ policies (BOPs), which combines multiple types of coverage into a single policy that protects against liability, property loss, and income loss. Liberty Mutual is in a unique position to assist a large number of business owners in any industry.

Liberty Mutual provides commercial insurance through independent agents all over the country. Commercial auto, equipment breakdown, inland marine, umbrella coverage, and workers’ compensation are among the coverage options available, as are 11 industry-specific solutions for construction, public entities, financial institutions, healthcare, real estate, and wholesale.

Huckleberry: Best in terms of ease of use 

Huckleberry is one of the latest business insurance services on the internet. The founders recognized that the entire business insurance industry was archaic, requiring paper applications and weeks to process them as if the internet did not exist. They then came up with a brilliant idea of using AI to make buying business insurance easier, faster, and entirely online. They don’t charge application fees, and everything can be done in five minutes or less, saving startup founders valuable time.

>>MORE: Best Business Owners Policy (BOP) Companies

How do you find cheap BOP?

The following are some tips to help you find the coverage you require at a reasonable price:

  • Shop around to find the best deal. Obtain quotes from several companies or compare the multiple quotes generated by a service such as CoverWallet.
  • Never stop looking for bargains. Before you renew your BOP insurance policy, make sure you get new quotes.
  • Take advantage of special offers. If they aren’t offered to you when you get a quote, whether you’re buying online or through an agent, inquire about them.
Thang Truong

Thang Truong covers small business insurance and small business success at BravoPolicy. He is a licensed P&C insurance agent. Previously, he held product leadership positions at, Capital One, NerdWallet, and Mulberry Technology. He holds a MBA degree from UC Berkeley - Haas School of Business.

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