A business owner’s policy (BOP) is a package that combines general liability insurance and commercial property insurance, and usually business interruption coverage, into one policy for small businesses. It is often simpler and more affordable than buying each coverage separately. Eligibility and exact coverage vary by state and insurer.
If you run a small shop, office, studio or service company, a BOP is often the first policy an agent suggests. This guide explains what a business owner’s policy covers, what it does not, and how to decide whether it fits your business.
What Does a Business Owner’s Policy Cover?
Most BOPs bundle three core protections:
General liability insurance
This covers claims that your business caused bodily injury or property damage to someone else, such as a customer slipping in your store. It may also include personal and advertising injury. For details, see what general liability insurance covers.
Commercial property insurance
This protects the physical assets your business owns or uses, such as:
- Your building, if you own it.
- Equipment, furniture and computers.
- Inventory and supplies.
Covered events usually include fire, theft and certain types of weather damage. Floods and earthquakes are commonly excluded.
Business interruption insurance
If a covered event forces you to close temporarily, this coverage can help replace lost income and pay ongoing expenses such as rent and payroll while you recover.
What a BOP Usually Does Not Cover
A BOP is a starting point, not complete protection. Common gaps include:
- Workers’ compensation for employee injuries.
- Professional liability for mistakes in your advice or services.
- Commercial auto for vehicles used for business.
- Cyber liability for data breaches, unless added as an endorsement.
- Flood and earthquake damage.
- Health and disability insurance for owners and staff.
Many insurers let you add optional coverages, called endorsements, to fill some of these gaps.
Who Is Eligible for a Business Owner’s Policy?
BOPs are designed for small and medium businesses with relatively low risk. Insurers typically look at:
- Your industry and the type of work you do.
- Your annual revenue and number of employees.
- The size of your premises.
- Your claims history.
Retail stores, offices, restaurants, consultants and contractors in lower-risk trades often qualify. Higher-risk operations may need separate, customized policies.
BOP vs Separate Policies
Buying general liability and property coverage separately gives you more flexibility, but it can cost more and take longer to manage. A BOP is usually the convenient option for a straightforward small business. Larger or more complex businesses sometimes outgrow a BOP and switch to a commercial package policy.
An LLC structure does not replace insurance either. Read does an LLC need insurance to understand why.
How Much Does a BOP Cost?
Premiums vary widely depending on your industry, location, property value, revenue, coverage limits and deductible. The only reliable way to know your cost is to request quotes from several insurers or work with an independent agent. Choosing a higher deductible usually lowers the premium, but increases what you pay when you file a claim.
How to Buy a Business Owner’s Policy
- List your assets, including equipment and inventory values.
- Identify your main risks: customers on site, stored goods, dependence on your location.
- Check whether clients or landlords require specific limits.
- Compare quotes with the same limits and deductibles.
- Read the exclusions carefully before signing.
- Ask about endorsements you may need, such as cyber or equipment breakdown.
Once you are covered, clients may ask for proof. Here is how to get a certificate of insurance.
Read also: Does homeowners insurance cover a home-based business? · How to compare insurance quotes
FAQ
Is a business owner’s policy required by law?
Generally, no state requires a BOP itself. However, landlords, lenders and clients often require liability and property coverage in their contracts.
Does a BOP cover employees who get hurt?
No. Employee injuries are typically covered by workers’ compensation insurance, which is purchased separately and is required for employers in most states.
Can a home-based business get a BOP?
Often, yes. Many insurers offer BOPs to home-based businesses, which can fill gaps a homeowners policy leaves for business property and liability.
Can I customize a business owner’s policy?
Yes. Most insurers offer endorsements to add coverages, such as cyber liability or equipment breakdown, depending on your needs and state.
