Insurance companies offering business insurance have policies that combine protection from all major property and liability risks in one set of packages. Some also sell coverages separately. One set of packages bought by small and mid-sized businesses is the business owners’ policy. Package policies are made for businesses that usually face the same kind and degree of risk. Huge companies might buy a commercial package insurance policy or may also customize their policies to meet their special needs and the risks they face every day.
What Is a Business Owner Policy?
A business owners’ policy or BOP is an insurance policy tailored to meet the needs of small businesses. This means it includes both commercial property as well as general liability coverages.
A business owner’s policy combines property insurance and liability coverage in one package. They offer protection for small businesses that are more cost-efficient than purchasing coverages separately. This is a standardized insurance policy that is generally available for businesses with fewer than 100 employees.
A business owner’s policy or BOP has all the protection needed for all major property and liability risks in one insurance package. This kind of insurance policy has the basic coverages requested by a business owner in one bundle. However, this is usually sold at a premium cost that is less than the total expense of individual coverages.
A business owner’s policy has both business property and business liability insurance into one business insurance policy. This certain insurance will help cover your business from claims leading from fire, theft or other covered disasters. Business owners insurance will also help cover claims that could result from your business’s operation such as claims of bodily injury or property damage, and also claims related to personal and advertising injury.
Businesses can make their business owner’s policy to help meet their different needs by additional other coverages such as:
- Data breach
- Business income for off-premises utility services
- Other specialized coverages
A BOP Policy is great since it can be custom-made to fit industry-specific businesses. This means this is great for businesses of any size, especially for small businesses. A business owner’s policy is a package policy that is built to cover businesses that usually face the same risks. Customizing your BOP insurance is a vital first step when insuring your business. You should do this from the start to protect against loss and damages that could happen along the way.
- A business owner policy (BOP) is a complete package that combines basic insurance coverages and is sold at a premium cost.
- A BOP usually protects all business owners against property damage, peril, business interruption, and of course, liability, too.
- Businesses can also choose additional coverage for crime, spoilage of merchandise, forgery, fidelity, and more which coverages differ among insurance companies.
- Insurance companies decide if a certain business qualifies for a BOP according to their business location, size of the location, and the class of business and revenue.
- If it meets the specific qualifications, a business may qualify for special considerations.
- This insurance coverage is a good fit for small businesses with fewer than 100 employees.
- Business owners’ policies are standardized so if you require special coverage, you might want to opt for a different policy.
- BOPs usually include property insurance for buildings and contents owned by the company and this comes into two different forms. These are the standard and special which provides more complete coverage
- Business interruption insurance covers the loss of income due to a fire or other catastrophe that stops the operation of the business. This can also include the extra costs of operating out of a temporary location.
- Liability protection covers your business’ legal responsibility for the harm it may cause to others. This harm is a possible result of things that you and your employees do or fail to do in your business operations that may end up causing bodily injury or property damage due to defective products, faulty installations, and errors in the services you provided.
BOPs do not have professional liability, auto insurance, worker’s compensation, or health and disability insurance. You’ll need to buy separate insurance policies to cover such professional services, vehicles, and your employees.
How Does a Business Owners Policy Work?
Many insurers that specialize in small businesses offer a BOP. We suggest working with us to purchase your business owner’s policy or contact the insurance company directly.
Your insurance company can issue a proof of insurance document which can help you when signing leases for instance once the insurance policy has already been paid for.
Some insurance companies issue policies on standard Insurance Services Office or ISO forms. Meanwhile, others may use their proprietary forms. However, most proprietary BOPs are only variations of the basic ISO policy. The basic ISO BOP form consists of a declaration page, a BOP form, the common conditions section, and one or more endorsements.
The ISO is an organization that offers industry-standard policy forms. This makes it easier for small insurance companies to provide documents that will stand up when you face court.
Understanding Business Owner Policies
A business owner’s policy offers business owners several insurance products combined into one which is generally aimed at small and mid-size businesses. Business owners’ insurance usually includes property, business interruption, and liability insurance. However, most insurance policies also require businesses to meet certain eligibility requirements to qualify.
The property insurance part of a BOP is usually called named-peril coverage which then provides coverage only for damage caused by events specifically included in the insurance policy. This is usually fire, explosion, wind damage, vandalism, smoke damage, etc. Some BOPs also offer open-peril or all-risk coverage. This option is from the special BOP form not the standard kind of BOP.
Normally, BOP-covered properties include owned or rented buildings, additions in progress, and outdoor fixtures. The BOP will also include any business-owned items or any items owned by a third party but kept temporarily in the care or control of the business owner. Moreover, the business property must usually be kept in required proximity of business premises such as within 100 feet of the premises.
The insurance company will cover the loss of income that was caused by a fire or other catastrophe that disrupts the operation of the business. This includes business interruption insurance. This can also include the extra costs of operating out of a temporary location.
In addition, the insurance company will cover the insured’s legal responsibility for the damage they may inflict on others if they have a Business Owner’s Policy with liability protection. This certain damage would have to be a result of the things they have done in the normal course of business operations which then may cause bodily injury or property damage caused by defective products, faulty installations, and errors in provided services.
Important to take note: According to the U.S. Small Business Administration or SBA, performing a risk assessment before buying a BOP in order for them to know which level of coverage to choose.
A business owner policy might also offer you crime insurance, vehicle coverage, and flood insurance. The business owner and the insurance company may make arrangements for additional coverage inclusions. This all depends on a business’s individual situation. Some of these might include computer equipment, spoilage of merchandise, mechanical breakdown, fidelity bond, and certain crimes. However, the coverage limits for these kinds of inclusions are usually low.
In addition, a BOP usually does not cover professional liability, worker’s compensation, health or disability insurance. These all would require separate insurance policies.
Requirements for a Business Owner Policy
However, please keep in mind that not all businesses qualify for business owner’s policies. Please also note that eligibility requirements differ among insurance companies. Insurance companies may ask you certain requirements such as your business location, the size of your business location, revenue, and a class of business.
One example is most insurance providers only cover businesses that handle all business on-premises. If a primary business property measures over or under a specified area, they may also have limitations. Usually, business classes are eligible for BOPs. This includes retail stores, apartment buildings, small restaurants, and office-based businesses.
Small businesses must qualify certain requirements in order for their coverage to also qualify under a BOP and these vary from one insurance company to another. Many kinds of businesses are qualified for a BOP. This includes motels, fitness studios, contractors, and apartment buildings provided they meet other needs or requirements.
Some businesses are not qualified for a BOP due to their size or the nature of their operations. Some examples of these are some restaurants, high-rise buildings, manufacturers, auto dealers and repair shops, tree trimmers, banks, bars, parking garages, and theaters.
Who Needs a Business Owner’s Policy?
You should get a business owner’s insurance policy if:
- Your business has a physical location. It doesn’t matter where you do your business. What’s important is if your business and assets have coverage. Your BOP insurance policy can help cover businesses run on your home, or in a rented or owned office, store, or even in a garage.
- Your business has a possibility of you getting sued. One example is when one of your customers slips and falls and gets injured at your workplace. If you don’t have the proper business owner’s insurance, you may be paying the fees out of your own expense to cover the customer’s medical expenses.
- You also have assets that could get stolen or damaged. These can range from digital assets and customer data to equipment, furniture, cash, or inventory and some assets that can be very hard to replace. If you have BOP insurance, it could help you cover if your assets get stolen or damaged.
Five reasons you need a BOP:
Employees: Your workers can accidentally injure your customers or even cause property damage. With this certain policy, you’ll have protection for them and your business.
Any chance of a lawsuit: If there’s an instance that one of your customers slips and falls at your store, this can help pay their medical expenses and of course, your legal expenses, too.
A physical location: Your BOP insurance policy can help cover businesses being run in your home, in a rented or owned office, store, or garage.
Assets that could get stolen or damaged: Digital property, equipment, furniture, cash, and inventory will be able to be replaced if you have the right insurance.
Private customer data: If someone steals or loses your personally identifiable information, this can help pay expenses such as notifying impacted clients and public relations.
What’s the Advantage of a Business Owner’s Policy?
Obtaining a BOP policy is a smart and convenient move. This simplifies coverage needs by offering business property insurance and business liability insurance at the same time. These two coverages are important combined into one package.
We also offer businesses like you a way to save your money while getting broad coverage for things such as:
- Loss of income
The BOP policy is a less expensive option than purchasing separate business property and liability insurance policies. Purchasing this policy is an even smarter and more convenient move for business owners since you can add other coverages to it. Businesses with specific needs can make their BOP by adding coverages such as:
- Business income for off-premises utility services
- Data breach
- Professional liability
- Good coverage: The property section includes insurance coverages such as business income that are not really included under a basic commercial property policy. The liability section has the same kinds of coverages as the basic ISO commercial general liability form or CGL.
- Cost-effective: A BOP has a wide coverage for a much lower premium.
- Not as flexible: A BOP can be changed or even expanded by the addition of endorsements. This is not as flexible as a basic package policy. The ISO BOP only has property and general liability coverages. Basic coverage may also include commercial property, general liability, commercial auto, inland marine, crime, and professional liability coverages. Other endorsements are also available for modifying a basic package than a BOP.
Some insurance companies will add professional liability or employment practice liability to a BOP. If you are looking for a BOP and need these kinds of coverage, we suggest looking for an insurance company that will include them in the policy.
What does a business owner’s policy (BOP) usually include?
An ordinary business owner’s policy will provide commercial property coverage, business interruption coverage, and general liability coverage.
Business owner’s insurance usually includes:
Commercial Property Insurance. We can help protect the property of your business:
This can include:
- Equipment Inventory
- Furniture Fixtures
Commercial property insurance will cover losses of accounts receivable, valuable papers, and records.
General Liability Insurance
The broader the coverage; the better when it comes to liability protection. Kindly consider our BOP policy to get the coverage you need. Our own insurance policy offers business liability insurance that may help in case you are sued for causing harm to a person and/or damage to property. This will also help cover legal court fees and your defense. It has to be like this since businesses can be sued even when it’s not evident that they were in the wrong. Liability insurance can also cover medical expenses.
We offer absolutely good standard plans that can be easily customized with various options so you can choose the right coverage you need. We know that you need complete business protection, not a one-size-fits-all coverage. We will work closely with you to help you decide the right kind of commercial liability insurance you need for every level of your business. You can have an advanced insurance policy if you add commercial liability insurance options such as endorsements that will meet the special needs of your company.
Who needs general liability insurance?
Here are some of the things you should take note of about general liability insurance. We suggest consulting with us to be sure about your specific needs.
You may need general liability insurance to protect yourselves against:
- Lawsuits, investigations, and settlements
- Medical damages, attorney fees, and Injury damages
- Abuse coverage for liability
Always keep in mind that the following are not usually protected:
- Employee injuries
- Auto-related coverage
- Intentional acts
Business Income Insurance
If there’s a chance that unexpected events cause a suspension in your business operations due to a covered loss, our insurance policy can help. Our Business Owners’ Policy can help you restore the loss of income to help you meet your day-to-day expenses. These could include monthly benefits to employees such as payroll and any other financial payments that are due to them. This can also include essential payments such as rent.
Equipment Breakdown Coverage
Productivity is affected when one of your equipment fails. This is why you should also consider coverage for equipment breakdown.
Breakdowns may come in many and different forms including the following:
- A computer network damaged by a power surge
- Problems with the electrical system
- Mechanical issues with your production equipment
What does equipment breakdown insurance cover?
This is also known as boiler and machinery coverage. Equipment insurance shields you in any instance that there are breakdowns due to motor burnout, boiler malfunction, power surges, and operator error. This insurance coverage covers all kinds of equipment such as mechanical and electrical equipment, computers and communication equipment, air conditioning and refrigeration systems, boilers, and pressure equipment. We also offer coverage for your new technology.
Equipment breakdown coverage can be used for the following:
- The cost of repairing or replacing the damaged equipment
- Expenses for time and labor to repair or replace the equipment
- Income losses when a covered breakdown causes a partial or total business interruption
- Other expenses incurred to curb loss or speed restoration
- The cost of replacing spoiled stock or materials
Equipment breakdown insurance covers the following:
- Power surges Mechanical malfunction Operator error
- Mechanical & electrical Computers & networks Heating & cooling
- Equipment repair Business income losses Lost or damaged inventory & materials
Should I get equipment breakdown insurance if I don’t own the equipment?
Yes, you should still get insurance even if you don’t own the equipment. However, if the equipment breaks down, you would eventually lose productivity, customers, and income. There might be a chance that you are using leased equipment or one of your vendors such as your internet service provider experiences a service outage. This insurance coverage will cover your business income losses in this kind of situation.
Does property insurance cover equipment breakdown?
Unfortunately, no. Most basic property insurance policies don’t cover your equipment. Warranties can also be limited. They are usually only covering new equipment for a short time. They don’t cover lost business income too. We suggest contacting us about adding an endorsement for equipment breakdown coverage.
What if you don’t own your building?
You still need equipment breakdown insurance even if you lease your building or if you use equipment that doesn’t belong to you. One instance is when you run a restaurant in a leased space. If there comes a time that the electrical panel shorts out, killing power to the heat, air conditioning, lights, and refrigerators for a number of days. You will of course lose customers and income even though the owner of the building is responsible for making the repairs to the panels. This insurance will help you pay for the business income loss.
What if an equipment problem off-site affects your business?
Losses to your business may be caused by equipment breakdowns at other locations.
One example is when you run a small business. Depending on your website for orders, you have an independent internet service provider hosting your site at another location. Equipment breakdown coverage will pay for lost business income when your location loses power or experiences damage to its equipment. This may have led to your interruption of your web presence resulting in a loss of orders.
How much equipment breakdown insurance should I buy?
To ensure you’re covered completely, consider all of the following examples that may occur:
- Damage to your equipment
- Damage caused to others’ property
- Unavailable replacement parts
- Being closed for an extended time
If you take a look at how things can add up, this can give you a better idea about the amount of coverage you could be needing and what your equipment insurance quote will look like.
The property section of a basic BOP policy covers the following kinds of property:
- Buildings located at premises described in the declarations. This includes machinery and equipment that is permanently installed
- Business personal property located in covered buildings
- Tenant improvements
- Property that belongs to other people
- Building glass owned by you
A Business Owners Policy covers loss or any damage by any danger that is not specifically listed in the exclusions section of the insurance policy.
Tip: The exclusions in a BOP are the same as those found in an all-risk property insurance policy.
There is also a special kind of form that then offers extended coverage of commercial property.
General Liability Coverage
A business owners policy includes two third-party liability coverages:
- Bodily injury and property damage liability
- Personal and advertising injury liability
The BOP gives both coverages under a single insurance agreement. They also provide certain coverages through some exceptions to exclusions. Some of the examples are contractual liability, host liquor liability, and damage to rented premises.
A BOP also includes medical payment coverage which pays for the medical expenses of individuals who have been injured as a result of your business activities. Medical payment coverage will pay injured parties in the absence of a lawsuit.
Business Interruption Coverage
Business interruption coverage or business income coverage is insurance that safeguards your business in case a natural disaster or other covered event stops your ability to conduct business. Also, in case your business has to completely shut down, this insurance coverage will replace your lost income or revenues.
Furthermore, you can add other coverages to your Business Owner’s Policy to help personalize coverage to your specific needs. Here are two popular optional coverages that you can consider adding to your Business Owner’s Policy:
Data Breach Coverage
Any kind of business that handles or stores private customer, patient, or employee information may be at risk for a possible data breach. When the sensitive information of your clients gets lost or stolen, it is very essential to act quickly. If you were able to act quickly, this allows you to restore confidence in your business. If ever a data breach occurs, we can help pay for the expenses from:
- Notifying affected individuals
- Engaging credit monitoring services if warranted
- Public relations
Our company also offers coverage to help with court fees. Moreover, our data breach coverage can help cover these in case your business is sued due to a breach. We also offer coverage when you store private data internationally.
Additional coverage options that can also help you:
- We also have coverage for replacing lost income and we can also pay for extra expenses incurred. This certain optional coverage can help keep your business running when it has to close temporarily or slow down operations due to a covered data breach.
- We can also help protect your business from a data breach that happened before the BOP policy effective date.
- We can also pay for extortion expenses and ransom payments related to the threat of a data breach.
Professional Liability (Errors and Omissions) Coverage. Your business places professional judgment and expertise on the line every day. You can, of course, get sued even if you did nothing wrong at all. For example, you can get sued by customers who are claiming for negligent acts or errors in your professional services. This certain coverage can help cover you against such claims. However, some kinds of businesses may not be qualified for this insurance coverage.
One advantage that we can name for BOP is that it automatically has a number of coverages that are usually added by an endorsement under a basic property policy. Most of these insurance coverages belong at a relatively low limit.
- Extra expense coverage
- Civil authority coverage
- Valuable papers
- Accounts receivable coverage
- Electronic data
- Newly acquired property
- Interruption of computer operations
- Mold coverage
A little warning: Please keep in mind that BOP’s don’t cover every single risk related to running a business. You will need to opt for workers’ compensation insurance or auto insurance and this depends on your situation.
Kindly take note that specialty coverages are not included in a BOP. We greatly suggest contacting us for advice if you’d also like to protect your business with cyber liability or liquor liability coverage so we can add an endorsement.
Some businesses like yours may need higher liability limits than a basic BOP has. A lot of insurance companies have a commercial umbrella that can be written in conjunction with a BOP to extend those limits. They can offer more protection in case you’ll be involved in an expensive lawsuit.
Do you have employees beyond your BOP?
Workers’ compensation insurance is also important for businesses with employees. This is usually purchased separately from a Business Owner’s Policy (BOP). This is also required in most states.
Workers’ compensation insurance pays for an employee or employee’s family for medical expenses in case of a work-related:
Workers’ Compensation will also help cover an employee’s income if they are out of work due to a covered illness or injury. This is also another option that you can add to your insurance policy in order to safeguard you and your employees from the unexpected.
Does Your Business Own, Rent, or Lease Vehicles?
For businesses that use cars and trucks, commercial auto insurance is another essential policy to purchase. This certain policy can help safeguard your business from financial losses when one of your employees is found at fault for a car accident.
Ask us any questions
Thank you for reading our article about the business owner’s package. We hope this write-up was able to help you. Kindly contact us if you have questions in mind. We’ll be waiting.