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What is a business owner’s policy?

A business owner’s policy (BOP) is a special type of commercial insurance package designed for small and medium-sized businesses. By bundling several types of coverage into a single policy, BOPs can offer a reduced premium, often making them a more cost-effective option than separately purchased policies.

Who Needs It?

Many small businesses can benefit from a BOP. You should consider one if your business fits any or all of the following standards:

 

  • A physical location (office, storefront, restaurant, etc.), whether owned or rented, where you conduct most or all of your business
  • A relatively low-risk industry
  • Fewer than 100 employees
  • Less than $5-$10 million in sales annually (the amount depends on the insurance company; each sets their threshold for qualifying for a BOP)

 

If your business has more than 100 employees and/or you make more than $10 million in sales annually, you should consider a commercial package policy, which is suitable for medium to large businesses.

What’s Included?

This is a tricky question, because every policy is customizable. That’s sort of the whole point.

 

Typically, a solid basis for a business owner’s policy would be the following types of coverage:

 

  • General Liability Insurance: covers claims of property damage, bodily injury and associated medical costs, advertising slander, and product liability.
  • Commercial Property Insurance: covers damage to your property or your belongings on site.
  • Business Interruption Insurance: also known as business income insurance, this covers the profit loss that your business may suffer after a disaster.

 

Of course, none of these are required. A business owner’s policy is a general term and each provider and each insured decides what’s right for them and what to include. Additional optional types of insurance that can be included may be:

 

  • Cyber Insurance: protects businesses from internet-based risks, and more generally from risks relating to information technology infrastructure and activities.
  • Professional Liability (E&O) Insurance: protects against financial loss as a result of malpractice, errors and/or negligence on the part of the policyholder.
  • Workers’ Compensation: protects workers in the event of an on the job injury. It includes wage replacement and medical benefits to employees injured in the course of employment. This is required in many states for any company with employees.
  • Commercial Auto Insurance: like standard auto insurance, this includes both liability and damage to the vehicle. Vehicles used for business typically require a separate policy because they are often exposed to more risk than personal vehicles.

 

There are many other types of insurance that you may want to include in your business owner’s policy. The right agent can help you figure out what’s best for you.

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