What does a business owner’s policy cover?
A business owner’s policy combines protection from property and liability risks in one package. A BOP protects businesses from common lawsuits with general liability insurance and covers business property with commercial property insurance.
A business owner’s policy provides coverage for:
Third-party bodily injury
If a customer is hurt on your property, the general liability insurance portion of your BOP can help pay for medical expenses or legal expenses in the event of a lawsuit.
Example: A customer trips on an uneven step in your office and breaks her arm. To recoup the cost of medical expenses and time off work, she decides to sue. Your policy can cover the cost of your customer's medical expenses, such as the ambulance ride and emergency room visit. If a customer refuses your assistance and opts to sue at a later date, your policy can help cover the cost of hiring a lawyer to negotiate and settle the case or take it to trial.
Third-party property damage
The general liability portion of a BOP can help repair or replace damaged customer property.
Example: One of your employees backs your company van into a client’s fence, causing $1,000 in damages. Depending on policy limits, business liability insurance can cover some or all expenses associated with repairing the damaged fence.
Product liability
Not all property damage or customer injuries happen inside a store. If a business manufactures, distributes, or sells products, it can be sued over the harm those products cause to people or property.
Example: Your company produces a defective electric kettle that overheats and causes a fire in a customer’s kitchen. He decides to sue to recover the cost of repairing his countertop. The legal expenses associated with product liability lawsuits are typically covered by a business owner’s policy.
Advertising injuries
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 your digital marketing agency designs a logo that’s similar to one created by a competing agency. The owner of the other agency decides to sue for copyright infringement. Advertising injury coverage in a business owner’s policy can help pay for legal defense expenses and settlement or judgment costs when you're sued over advertising mistakes.
Business property damage
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 your office and steals laptops and other electronic equipment. Commercial property insurance can help pay to replace the stolen items and repair the broken window.
A business owner’s policy does not cover:
Professional errors
Professional liability insurance, also called errors and omissions insurance, can cover lawsuits over professional mistakes, including undelivered services and missed deadlines.
Example: A videographer misses a deadline for producing footage for a clothing store’s holiday campaign. Because of this, the store was unable to run its ad during the holiday season. The store’s owner decides to sue the videographer for the revenue the ad was projected to generate.
Employee injuries
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 part-time worker in a warehouse suffers a back injury from lifting a heavy box. Workers’ comp can help cover medical expenses and lost wages.
Employee discrimination lawsuits
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.