What Does a BOP Cover?
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BOP Coverage Guide

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.

Covered BOP Lawsuits and Property Loss

Business Owner's Policy coverage includes General Liability Insurance, which covers expenses related to lawsuits filed by people outside of your business in response to:

  • Slip-and-fall accidents and injuries that occur at your business.
  • Reputational injuries.
  • Client property damage.
  • Product liability.

If a healthcare clinic is sued when a patient slips on the floor in the waiting room, a physical injury lawsuit could cost between $10,000 and $1 million, depending on whether it is settled out of court or goes to trial. Fortunately, BOP liability coverage can help pay for legal fees, court costs, settlements, and the money owed to the injured party.

Business Owner’s Policies also include Commercial Property Insurance, which covers the property your business owns and keeps on site. If this property is stolen, Property Insurance can cover 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.
  • Some weather events.

If a fire burns down a hair salon, the salon owner must repair the building, buy new equipment, furnish 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 the salon has BOP Insurance, the insurance company can pick up the tab and helps the business get back on its feet.

Additional BOP Coverages

Many BOPs also include Business Interruption Insurance, which helps cover expenses – such as lost revenue – that accrue when a business is forced to temporarily close after a covered event. Many BOPs limit the amount of Business Interruption Insurance to only cover six months of lost revenue. If you want more income insurance, business owners must often buy Property Insurance and General Liability Insurance separately – not in a BOP bundle.

Depending on the insurance company you purchase BOP coverage from, you may be able to add Cyber Liability Insurance to your bundle. This policy can help small businesses recover from a data breach by paying for the cost of breach notifications, credit-monitoring services, and security patches. This policy offers valuable protection for any business that handles sensitive third-party information.

Talk to your insurance agent about your options.

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.
  • Employment Practices Liability Insurance. The policy can help pay for expenses related to lawsuits filed by prospective, current, or former employees alleging discrimination, harassment, or wrongful termination.

What Endorsements Can I Add to My BOP Coverage?

Small-business owners can add "endorsements" to their policy to include 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.

When you talk with an insurance agent, ask them if there are any endorsements that make sense for your business. In the meantime, get free BOP coverage quotes by submitting an online insurance application.

Business Owner's Policy: Further Reading