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What is a business owner’s policy (BOP)?

A business owner’s policy (BOP) is defined as the combination of two important forms of insurance – commercial property and general liability – into one convenient package. Business owner’s policies usually cost less than buying the two coverages separately.

How a BOP protects your business

A business owner’s policy combines general liability and commercial property insurance coverage to protect you against lawsuits and damages. In one convenient package, it covers several major lawsuit risks your small business could face, including those resulting from:

  • Third-party bodily injuries
  • Third-party property damage
  • Product liability incidents
  • Advertising injuries

Business owner’s policies also provide financial support when your building or commercial property (also called business personal property) is damaged by an incident the policy covers, typically:

  • Fire
  • Theft
  • Vandalism
  • Some weather-related events

In addition to providing a financial backstop for your small business, a BOP also gives you greater leverage with property managers and major customers. In many cases, both parties want reassurance that a lawsuit won’t put you out of business. Showing them your business owner’s policy certificate of insurance will give them greater confidence in your staying power.

Let’s look more closely at how a business owner’s policy can protect your business finances and property. 

Third-party bodily injuries. If your business is open to the public, you are liable if they fall or get injured while on your property. A business owner’s policy will cover legal and other expenses relating to the lawsuits injured parties file against you.

Third-party property damage. If you or one of your employees damages someone else’s property, you are responsible for the cost of repairing or replacing that item. A business owner’s policy covers that cost for you.

Product liability lawsuits. If you manufacture products, your business could be legally liable for any injuries they cause to third parties or to someone else’s property. A business owner’s policy provides a financial safety net.

Advertising injuries. If you or an employee commit libel, slander a third party, or infringe on a firm’s copyright, you may be subject to legal action. Your business owner’s policy will pay for your legal counsel and also court settlements or judgments.

Business property damage. Most small businesses are exposed to fire, theft, and weather-related damage risks. Without a business owner’s policy, you would have to cover these losses yourself. With insurance, your policy will provide funds to make repairs, replace damaged items, and help your business recover.

Learn more about business owner’s policy coverage.

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Eligibility requirements

Although insurance companies have different underwriting requirements, most will provide a business owner’s policy to a small business that meets the following criteria:

  • Does business in a low-risk industry
  • Does business outside the owner’s home
  • Has fewer than 100 employees
  • Has annual sales of less than $1 million
  • Does business primarily on site
  • Has a relatively small commercial space

Who needs a business owner’s policy?

Any small business owner who wants to protect the investments they’ve made in their business should have a business owner’s policy. Those with limited budgets should also consider buying one, since they are usually less expensive than purchasing separate general liability and commercial property insurance policies. 

Businesses in the following industries are excellent candidates for a business owner’s policy:

How do I find free quotes for a business owner's policy?

Insureon helps small business owners compare commercial insurance quotes from A-rated U.S. carriers with one easy online application. Start an application today to protect your business against legal liabilities and property damage.

Updated: August 19, 2022
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