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Business Owner's Policy Cost Considerations
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Factors that Affect the Cost of BOP Insurance

A Business Owner's Policy (or "BOP") is a lower-cost insurance option for small-business owners. It combines two policies:

By bundling these policies together and selling only to small-business owners, insurance companies can lower the cost of a Business Owner's Policy while still offering the coverage small businesses need. Here's how the policy works.

What Is a Business Owner's Policy?

A Business Owner's Policy is actually an insurance bundle. It contains the two policies you could purchase separately, but if you buy them together, you can save money.

BOP General Liability Insurance covers a number of basic business lawsuits by paying for your legal expenses (lawyers' fees, settlements, and damages) when someone outside your organization sues it. Covered lawsuits include those related to property damage, physical injuries, and advertising injuries (libel, slander, privacy invasion, etc.).

BOP Property Insurance reimburses your business when its commercial property is lost or damaged by fire, theft, vandalism, and some weather damage. When a claim is covered by the insurance company, it sends you money to restore your damaged property. The policy only covers property your business owns.

Which Businesses Can Reduce Costs with a BOP?

Bundling insurance together can help you control the cost of small business insurance policies. A Business Owners' Policy does just that. With a BOP, you'll have lower rates for two important policies. Most businesses purchase General Liability Insurance and Property Insurance, so it makes sense to buy them together if you can get a discount.

However, before you bundle General Liability and Property coverage into a BOP, you should know that some businesses don't qualify for a Business Owner's Policy.

Only small businesses can be covered by a BOP. And while many small businesses can get covered, some can't because insurers find them too risky.

In order to qualify for a Business Owner's Policy, your small business…

  1. Must have fewer than 100 employees.
  2. Can't rent or own a large-scale office environment.
  3. Can't work in a high-risk industry.
  4. Can't require Business Interruption Insurance for more than six months.

Business Interruption Insurance is a Property Insurance add-on that reimburses your business for lost revenue if it can't operate at its normal capacity after a covered event.

How Much Is a Business Owner's Policy?

As with any policy, insurance rates for a BOP increase if an insurance company thinks your business has more risk. Generally speaking, BOP rates are higher for businesses that…

  • Have more employees.
  • Perform physical or risk-prone jobs.
  • Travel for work.
  • Frequently work at client offices.
  • Have lots of property to insure.
  • Work in a large office space.
  • Work with dangerous chemicals or power tools.
  • Have been rejected for insurance in the past.
  • Had to file Property or General Liability Insurance claims in the past.

If your business has any of these higher-risk factors, you'll likely have to pay higher premiums on your Business Owner's Policy. But that's just how insurance works. More risk means higher costs.

Business Owner's Policy: Further Reading