What does a business owner’s policy cover?

If a customer is hurt on your property, the general liability insurance portion of your business owner's policy (BOP) can help pay for medical expenses or legal expenses in the event of a lawsuit.

Example: A customer trips on an uneven front step at a restaurant and breaks her wrist. To recoup the cost of her medical expenses, she decides to sue. The restaurant's BOP covers the cost of the resulting legal battle, including attorney's fees and the court-ordered judgment over the injury.

The general liability portion of a BOP can help repair or replace damaged customer property. It can also pay legal fees if a customer sues over the damage.

Example: An employee at a lawn care business accidentally drives a riding mower into a pergola, causing $2,000 in damages. The company's BOP pays to repair the pergola. It would also cover legal costs if the homeowner decided to sue.

Property damage or customer injuries don't have to happen on you or your client's property. If a business manufactures, distributes, or sells products, it can be sued over the harm those products cause to people or property.

Example: A janitorial services company sells cleaning products on the side. A customer accidentally gets the solution in his eye. He ends up in the emergency room and sues the cleaning company for damages. The company's product liability insurance helps cover the legal expenses and eventual settlement.

If someone sues a business owner or employee over an advertising injury such as libel, slander, or copyright infringement, the liability portion of a BOP can help pay for lawsuit expenses.

Example: An employee at a house cleaning company posts a negative comment about a competing cleaning service on the company's Facebook page. The competitor sues for defamation. The advertising injury coverage including in the cleaning company's BOP helps pay for legal defense expenses and the resulting settlement.

The commercial property insurance portion of a BOP can help pay for expenses to repair or replace your business property when it's damaged by fire, theft, and some weather-related events.

Example: A thief breaks into a tax preparer's office and steals laptops and other electronic equipment. Commercial property insurance can help pay to replace the stolen items and repair the broken window.

Professional liability insurance, also called errors and omissions insurance, can cover lawsuits over professional mistakes, including undelivered services and missed deadlines.

Example: A web developer misses a deadline for launching a website advertising a clothing store’s holiday campaign. The store’s owner decides to sue the developer over the revenue the website was projected to generate.

Workers' compensation insurance is the policy that covers medical expenses, physical therapy, and some lost wages for employees who are injured at work.

Example: A carpenter injures his back while lifting heavy boards at a worksite. Workers’ comp can help cover his medical expenses and part of the wages lost while he recovers.

Employment practices liability insurance (EPLI) can cover lawsuit expenses related to claims of harassment, discrimination, and wrongful termination.

Example: A real estate agent files a lawsuit claiming that her agency assigns the most valuable properties to male agents. An EPLI policy could cover legal expenses for the real estate agency.

If a fire or other incident destroys your customer records, you could have trouble collecting outstanding payments. Commercial property insurance doesn't cover the cost of recovering these payments unless your policy has an accounts receivable endorsement.

Example: A fire at a medical office destroys the business's customer payment records. To collect missing payments, the office hires a temporary accounting professional – paid for by the accounts receivable endorsement on its BOP.

BOPs have some coverage exclusions. For example, a BOP doesn't usually pay for property damage caused by natural disasters like earthquakes, hurricanes, tornadoes, and floods. If you need coverage for these events, you'll need to add a special endorsement to your policy.

A BOP also doesn't pay legal defense costs for lawsuits involving intentional copyright infringement or willful negligence – which can be criminal offenses. Purposeful customer injury or property damage falls into the same category and isn't covered by the policy.

Incidents that involve alcohol are also excluded from a BOP. With a liquor liability endorsement, you can get coverage for these claims.

Check with an Insureon agent to make sure your insurance policy includes all the coverage you need.