A Business Owners Policy, commonly called a BOP, is an insurance package designed to combine several important types of business insurance into one policy. BOPs are commonly used by small and midsized businesses that need protection for their property, liability exposures, and potential loss of business income.

Instead of purchasing several separate policies, eligible businesses can often obtain multiple coverages through a single BOP. A typical policy may combine commercial property insurance, general liability insurance, and business income coverage.

For example, if a fire damages your business location, the property portion of the policy may help pay for covered repairs and damaged business property. If the damage forces your business to temporarily close, business income coverage may help replace certain lost income and cover eligible continuing expenses. If a customer is injured at your business and files a covered liability claim, the general liability portion may provide protection.

Not every business qualifies for a BOP, and coverage varies between insurance companies. The size of your business, industry, location, revenue, property, and particular risks can all affect eligibility and coverage options.

A Business Owners Policy typically combines several of the most important coverages small and midsized businesses need.

Commercial property coverage may help protect your building, if you own it, as well as business property such as furniture, equipment, inventory, and other covered items.

General liability coverage may help protect your business against certain claims involving bodily injury, property damage, and other covered liability exposures. For example, if a customer slips and falls at your business and alleges that your company was responsible for the injury, your liability coverage may help with covered legal and claim expenses.

Business income coverage may help replace certain lost income and continuing expenses if a covered loss forces your business to temporarily suspend operations.

Additional coverage can often be added depending on the business and insurance carrier. Because BOPs vary considerably, business owners should review the specific coverages, limits, deductibles, and exclusions of any policy they are considering.

Although a Business Owners Policy combines several valuable protections, it does not cover every risk a business may face.

A standard BOP generally does not replace workers' compensation insurance for employee work-related injuries. It also typically does not provide the same protection as a commercial auto policy for vehicles owned or regularly used by the business.

Depending on the policy, separate or additional coverage may also be necessary for risks involving professional errors and omissions, cyber incidents, flooding, employment-related claims, and certain specialized equipment or business activities.

For example, a contractor who regularly transports expensive tools between job sites may need inland marine coverage in addition to a BOP. A business with employees may need workers' compensation, while a company with vehicles may need commercial auto insurance.

This is why a BOP should be viewed as the foundation of an insurance program for many eligible businesses rather than an insurance policy that automatically covers every possible business risk.

A Business Owners Policy can be appropriate for many small and midsized businesses, particularly businesses that have property to protect and interact with customers, clients, vendors, or the public.

Businesses that may qualify can include retail stores, offices, restaurants, professional service companies, salons, certain contractors, and other eligible businesses. Some home-based businesses may also benefit from a BOP because homeowners insurance often provides limited or no coverage for many business-related risks.

A BOP may be worth considering if your business owns equipment, furniture or inventory; operates from a physical location; could lose income following a covered property loss; or faces liability risks involving customers or other third parties.

Eligibility requirements vary among insurance companies. Certain higher-risk businesses or businesses above particular revenue, property, or operational thresholds may need a more customized commercial insurance program instead.

No. General liability insurance and a Business Owners Policy are related, but they are not the same thing.

General liability insurance primarily addresses certain liability risks. It may help protect your business when a third party claims your business caused bodily injury, property damage, or another covered loss.

A Business Owners Policy generally includes general liability coverage but combines it with other important protections, typically including commercial property and business income coverage.

For example, general liability insurance might respond to a covered claim after a customer is injured at your business. However, it would generally not pay to replace your own inventory destroyed in a fire. The property coverage within a BOP may provide protection for that type of covered loss.

For eligible businesses that need both liability and property protection, a BOP can provide a convenient way to combine these coverages.

A Business Owners Policy typically includes commercial property coverage that may protect many types of property used by your business.

Depending on the policy, this could include furniture, computers, office equipment, inventory, supplies, machinery, and other covered business property. If your business owns its building, coverage for the structure may also be included.

However, where your equipment is located can matter.

Property that regularly leaves your business premises may not have the same protection as property kept at your insured location. Contractors, installers, service companies, and other businesses that transport tools and equipment between locations may need inland marine insurance or another specialized coverage.

Business owners should consider not only how much their equipment is worth but also where and how it is used when reviewing their insurance needs.

A BOP commonly includes business income coverage, which may help if your business must temporarily suspend operations because of a covered loss.

For example, suppose a fire severely damages your retail store and you cannot operate from the location while repairs are being completed. Depending on your policy, business income coverage may help replace certain income your business would otherwise have earned and help pay eligible continuing expenses during the covered restoration period.

Coverage may also help with certain extra expenses necessary to keep the business operating, such as temporarily relocating to another location, depending on the policy.

However, business income coverage does not apply whenever a business loses revenue for any reason. The interruption generally must result from a covered cause of loss and meet the requirements specified in the policy.

Business Owners Policy provides several important protections for the business, but it generally does not replace workers' compensation insurance.

If an employee suffers a work-related injury or occupational illness, workers' compensation insurance may provide benefits for covered medical expenses, lost wages, rehabilitation, and other eligible costs.

Workers' compensation requirements vary by state and by the circumstances of the business. Employers should make sure they understand the requirements that apply where they operate and employ workers.

A BOP and workers' compensation policy therefore serve different purposes. Many businesses with employees may need both as part of their overall insurance program.

There is no single amount of BOP coverage that is appropriate for every business.

The right coverage depends on factors such as the value of your building and business property, equipment and inventory, annual revenue, liability exposure, number and type of locations, and the potential financial impact of an interruption to your operations.

When reviewing property coverage, consider what it could cost to repair or replace your business property after a major covered loss - not simply what you originally paid for it.

Liability limits should also reflect the potential risks associated with your operations. Businesses with frequent customer interaction, significant assets, contractual insurance requirements, or greater liability exposures may need higher limits.

As your company grows, your insurance needs can change. Adding employees, purchasing equipment, moving locations, increasing inventory, or offering new products and services are all good reasons to review your coverage.

The cost of a Business Owners Policy varies considerably because insurance companies evaluate the individual characteristics and risks of each business.

Factors that may influence the premium include your industry, business location, annual revenue, property values, building characteristics, number of employees, coverage limits, deductibles, and claims history.

A small professional office with limited customer traffic will generally present different risks than a restaurant, retail store, or contractor.

The coverages and limits selected also affect the cost. While choosing higher deductibles or lower limits may reduce the premium, price should not be the only consideration. A less expensive policy that leaves important coverage gaps could ultimately be much more costly after a serious loss.

Because Nicholas Insurance Solutions is an independent agency that works with numerous insurance carriers, the agency can compare available Business Owners Policy options rather than being limited to the products of a single insurance company.