Business Owners Policy

Embroker’s Business Owners Policy (BOP) includes market-leading commercial property, general liability, and business interruption insurance. Get it in minutes, not days.


What Is BOP Insurance?

A Business Owners Policy (BOP) is a package of insurance policies that the majority of business owners need to have—which is why insurance carriers bundle these coverages and sell them as one product.

More often than not, a BOP is sold to small and medium-sized businesses, since large corporations tend to have more complex risks that require customized policies.

In a typical BOP, businesses buy the following policies as one bundle or insurance package:

What’s The Difference Between a Business Owners Policy and a Commercial Package Policy (CPP)?

The main difference between a BOP and a CPP is that the CPP is much more flexible, which means that your business has greater options when it comes to putting together a coverage package that works best for your company’s specific needs.

In any case, whether or not you purchase a BOP or CPP is going to depend on two things; your coverage needs and your eligibility.

For more, read our full guide on business owners policy vs. commercial package policy.

Who Is It For?

A Business Owners Policy is a policy package that was created with small businesses in mind. It was designed to cover many of the business risks that a majority of small businesses share, regardless of industry.

Large companies with more complex insurance needs usually don’t qualify for a BOP, meaning that the coverage they need can’t be provided by a Business Owners Policy. These large businesses would most likely be better off purchasing a variety of individual insurance policies that are all tailored to cover their specific needs based on their more complex risk profile.

If you fit into the following profile, a Business Owners Policy could probably be the right solution for covering your basic business insurance needs:

  • You have less than 100 employees
  • You make less than $10 million in annual sales
  • You have a physical location (could be your home) where most of your business is conducted

Optional Coverages: Other coverages you can consider are those that are specific to the project and the region in which the project is taking place. This can include protection from natural disasters such as floods and earthquakes, pollution and environmental liability, and other industry-specific coverages that might be needed.

  • Completed Operations Coverage: This coverage will protect everyone enrolled in the insurance and it should ideally provide protection through the statute of limitations to make sure that everyone is protected for an extended period of time well past the actual completion date of the project.
  • Subcontractor Default Insurance: One of the newer types of coverage available with OCIPs, this type of policy is actually pretty similar to Surety Bonds, protecting the sponsor of the project against failures related to the work of the contractor and subcontractors involved. This might be a better option financially than surety bonds in some cases, since contractors working under an OCIP might not put a lot of effort into finding surety bonds at the best possible price.
  • Professional Liability Insurance: The Professional Liability insurance purchased within an OCIP can cover engineers, architects, and other professionals associated with the project. Be sure to check if the design professionals involved in the project already have this type of coverage so you’re not buying it twice. If there are many professionals of this nature involved in the project, adding professional liability to the coverage might not make sense financially and even when you enroll all the engineers, architects, and other design professionals in the OCIP, the coverage might not be a good enough substitute for the professional liability insurance that they already have in place.
  • Excess Liability Insurance: Excess liability coverage, also known as Umbrella liability, extends the coverage of an existing General Liability insurance. Excess liability insurance is added to an OCIP to increase limits and cover any possible gaps in the existing coverage. Contractors may also carry excess liability insurance already. In similar fashion to their CGL policies, contractors may need to modify or eliminate their existing policies to avoid overlap.

Why Do You Need It?

A common misconception is that big companies need insurance more than small businesses. That simply isn’t true. While large companies might have more complex risks, one unforeseen event or misstep can be financially crippling to a small business if it is not insured.

A large business will probably have the money to pay for a lawsuit without insurance or repair their office if a hurricane destroys it. But with less cash flow, a small business most likely wouldn’t have the funds to cover the additional costs from such events. Insurance is there to provide financial support and relief for such unexpected circumstances.

A Business Owners Policy can offer business owners peace of mind. This policy package makes it easy for business owners to maintain all of the most common insurance policies they need without having to manage several policies or sign contracts with different insurers. When you buy a BOP you have one policy that you’ve purchased from one insurer, making any eventual claims much simpler to handle.

What Does BOP Insurance Cover?

When you purchase a Business Owners Policy, you will be covered for risks by the three insurance policies that are packaged into the BOP. Let’s take a deeper look into what those specific insurance policies cover.

Commercial Property Insurance

Commercial property insurance will protect you in the event that your business property is damaged or any equipment and other business contents you might own are damaged or stolen.

If your property is damaged by severe weather or vandalized, this policy will kick in to cover the costs of dealing with such issues. If any work equipment or inventory is stolen or damaged, a proper commercial property policy should cover those losses as well.

There are, generally, two important decisions to make when purchasing a commercial property policy. One is deciding between replacement cost and actual cash coverage. This means that you are either buying a policy that will cover the full replacement costs of your property or one that will only cover its depreciated value.

The second is deciding between a named perils and all-risk insurance policy. The first policy type covers damage incurred only by perils that are explicitly listed in the policy, while all-risk policies cover all risks that aren’t specifically excluded from the commercial property policy.

In any case, all businesses that either rent or own commercial property need to have property insurance and most tenants won’t rent to businesses that aren’t covered.

General Liability Insurance

Another insurance policy that every business needs is general liability. If a claim is filed against your business related to third-party bodily injury or property damage, a general liability policy should be able to cover defense costs and possible settlements.

It’s very common to hear about businesses being sued because of customer or client slip-and-fall accidents. A general liability policy would cover such claims. If someone who doesn’t work for your company is injured on your property, general liability would cover defense costs if a claim arises, as well as medical costs and any other expenses that could be related to the injury.

Business Interruption Insurance

If your business experiences a natural disaster, theft, or vandalism, commercial property insurance will cover these losses. However, it won’t cover the loss of income your business could incur if it is forced to close down for a period of time. That’s why every BOP should also include business interruption insurance.

A standard business interruption policy usually covers your business income for up to a full year, but only if you are forced to suspend operations for a reason that is covered within the policy. This helps companies make rent payments and pay their employees while the business is recovering or relocating and, therefore, not making money.

What’s Not Covered?

A typical BOP covers only what you would expect the coverage included in it to cover. And even though the coverage that a BOP provides is standard coverage that just about every business will need, there’s a good chance that your business will need to buy additional coverage that does not fall into the scope of what a BOP can offer you.

There are policies that most small businesses need that simply cannot be attached to a BOP in any way. Workers compensation insurance and commercial auto insurance are good examples of popular coverage options that usually need to be purchased alongside a BOP.

However, BOPs are still fairly customizable, meaning that there are plenty of endorsements that can be attached to your BOP in order to provide you with more comprehensive coverage, including policies such as professional liability, EPLI, and common commercial property endorsements such as spoiled merchandise and mechanical breakdown coverage.

Naturally, the more endorsements you add to your BOP and the broader the scope of your coverage becomes, the more expensive your BOP will be.

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