What Does a BOP Cover?
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What Does BOP Insurance Cover?

A Business Owner's Policy (BOP) offers a wide range of small business coverage at a reduced cost. BOPs bundle General Liability Insurance and Property Insurance, two policies that nearly all small businesses need to have.

Why are these policies so important? Every business has property — office furniture, computers, equipment, etc. — and every business is exposed to risks that could lead to lawsuits. These two policies protect your business from the financial risks of damaged property and common lawsuits.

Let's take a closer look at what BOP coverage includes.

Covered BOP Lawsuits and Property Loss

Business Owner's Policy coverage includes General Liability Insurance, which covers expenses related to lawsuits brought by people outside of your business. These lawsuits include those related to:

  • Property damage.
  • Reputational injuries.
  • Slip-and-fall accidents.
  • Other injuries on your premises.
  • Injuries your business causes on a client's property.
  • Product liability.

Say a healthcare clinic is sued when a patient slips on the floor in the waiting room. A physical injury lawsuit like this can cost between $10,000 and $1,000,000, depending on whether it is settled out of court or goes to trial. Fortunately, General Liability Insurance can cover legal fees, court costs, settlements, and the money you owe the injured party.

The BOP also includes Commercial Property Insurance, which works nearly the same way as Homeowner's Insurance. Property Insurance covers the property your business owns and keeps on its premises. If this property is stolen, Property Insurance covers the cost of replacing it. Property Insurance also covers the cost to repair or replace items that have been damaged or destroyed by:

  • Fires.
  • Vandalism.
  • Power surges.
  • Some weather events.

Say a fire burns down a hair salon. The salon owner must repair the building, buy new equipment, refurnish the interior, and replace the lost inventory. That process takes months and probably costs more than the salon owner has in the bank.

However, if you have BOP Property Insurance, the insurance company picks up the tab and helps your business get back on its feet. Many BOPs also include Business Interruption Insurance (BII), which is a type of extra Property Insurance. It helps you pay the expenses — such as lost revenue — that accrue when your business is forced to temporarily shut down after a covered event.

What Coverage Isn't Included in a BOP?

A Business Owner's Policy doesn't include the following types of coverage:

  • Workers' Compensation Insurance. This is the coverage that helps employers pay for their employees' workplace injuries and illnesses.
  • Professional Liability Insurance. Sometimes called Errors & Omissions Insurance, this coverage helps business owners pay for lawsuits related to their professional duties.

In addition, many BOPs limit the amount of Business Interruption Insurance you can receive. BOPs only cover six months of lost revenue. If you want more income insurance, you'll have to buy Property Insurance and General Liability Insurance separately — not in the BOP bundle.

What Endorsements Can I Add to Business Owner's Policy Coverage?

Small-business owners can add "endorsements" to their policy to include certain kinds of additional coverage. The endorsements that benefit your business depend on your industry.

For instance, food service businesses can add a BOP endorsement that reimburses them when food spoils due to a covered incident. Businesses that live near water can add flood coverage, a type of damage that is generally excluded from basic Property Insurance policies.

When you talk with an insurance agent, ask them if there are any endorsements that make sense for your business. In the meantime, you can get a free customized insurance quote for BOP coverage by submitting an online insurance application. Our agents reply quickly with a variety of quotes for you to choose from.

Business Owner's Policy: Further Reading