Business Owners Policy (BOP)
Plain English
A business owners policy, or BOP, packages property insurance, general liability and business interruption coverage in one policy for small businesses. Triple-I says fire, burglary, liability and business interruption losses are all covered under a BOP. It usually excludes workers' comp, professional liability, auto and flood, which need separate policies.
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Definition
A business owners policy, commonly called a BOP, bundles general liability insurance and commercial property insurance into a single package policy designed for small and midsize businesses, and it typically includes business income (business interruption) coverage as well. It's typically priced and issued more efficiently than buying each coverage separately, and many insurers offer optional add-ons, such as equipment breakdown or cyber liability, that can be layered onto the base package. BOPs are generally available to lower-risk businesses like retail shops, offices, and small restaurants, while higher-risk or specialized operations often need coverage built individually instead.
Why It Matters
For many small businesses, a BOP is a practical, cost-effective way to get core protection in place without piecing together multiple policies individually, though it's not automatically comprehensive. Businesses with specific risks, like professional advice, employee injuries, or significant cyber exposure, typically still need additional coverage beyond what a standard BOP includes.
Real-World Example
Say a small bakery buys a BOP. A kitchen fire damages its ovens and stock (property coverage), it closes for two weeks (business income), and a customer later slips on a wet floor (general liability). One policy responds to all three, less deductibles. A cashier's theft, a delivery driver's crash and a flood would each need other coverage.
Personal vs. Commercial
For businesses: Reviewing what a BOP excludes is often as important as reviewing what it includes, since gaps like professional liability, employee injuries, and commercial vehicles are common blind spots for business owners who assume a BOP is a complete solution.
Common Misconceptions
- People often assume a BOP covers everything a business might need, when it typically excludes things like employee injuries, professional errors, and vehicle-related claims, which need separate coverage.
- It's sometimes assumed every business qualifies for a BOP, when insurers typically limit BOPs to lower-risk business types and revenue levels, with higher-risk operations needing individually underwritten coverage instead.
- Some think a BOP includes workers' compensation, when workers' compensation is generally a separate, often state-mandated, policy.
- People sometimes believe a BOP's standard limits are automatically enough, when many businesses need to increase limits or add specific endorsements based on their actual risk profile.
Key Takeaways
- A BOP bundles general liability and commercial property coverage into one policy, typically with business income (business interruption) coverage included, often at a lower combined cost than buying each separately.
- It typically excludes workers' compensation, professional liability, and commercial auto coverage.
- BOPs are generally designed for lower-risk small and midsize businesses; higher-risk operations often need custom-built coverage.
- Optional add-ons like equipment breakdown or cyber liability can often be layered onto a base BOP.
Frequently Asked Questions
What does a BOP cover?
Typically property (building and contents), general liability, and business income after a covered loss, in one package.
What isn't covered by a BOP?
Workers' comp, professional liability, commercial auto and flood usually need separate policies. Employee dishonesty is excluded from the basic BOP but can be added, Triple-I says.
Who is a BOP for?
Small and mid-sized businesses with common risks, such as shops, offices and restaurants. Larger or higher-risk businesses may need a commercial package policy.
Is a BOP cheaper than separate policies?
Packaging coverage often costs less than buying each part separately, but compare quotes for your business.
Related Terms
Related Coverages
- Business Owners Policy
- General Liability Insurance
- Commercial Property Insurance
Related Scenarios
Explore the rest of the Business Insurance category.
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The factual claims on this page were checked against these sources. Rules and figures change, so check the source itself if you need to confirm the current version.
Educational information, not advice: This page is for general education only, not legal, financial, or insurance advice. Actual coverage, discounts, and requirements depend on your policy’s wording, your insurer, and the laws of your state. Confirm specifics with your own insurer or a licensed agent before making a decision. Insurpedia does not sell insurance and does not recommend specific insurers.