What is a Business Owners Policy (BOP) and What Does It Cover?
What is a Business Owners Policy (BOP) and What Does It Cover? Let’s face it – owning a business is kind of like spinning plates while riding a unicycle… on a tightrope… in a windstorm. There is a lot going on, and any wrong move could cost you big time. That’s why having the right insurance should be on your priority list.
Enter the Business Owners Policy, or as it’s affectionately known in the insurance world, the BOP.
So, What Exactly Is a BOP?
A Business Owners Policy is basically a greatest hits collection of core business insurance coverages, bundled together into one convenient package. It’s designed for small to mid-sized businesses and gives you peace of mind without having to piece together multiple separate policies. Think of it as the insurance equivalent of a combo meal: you get more for less, and everything you actually need is included.
Now, this doesn’t mean a BOP covers everything under the sun. Still, it does take care of the major stuff most small businesses face – without you having to chase down a dozen different agents or memorize a dictionary-sized insurance glossary.
What Does a BOP Typically Cover?
Here’s what comes standard in most BOPs:
1. Property Insurance
This part covers the physical stuff your business owns – your building (if you own it), equipment, inventory, furniture, and even that fancy espresso machine in the break room. Whether it’s stolen, damaged in a fire, or water decides to stage a dramatic entrance, you’re protected.
Some BOPs even offer “open perils” coverage, which means it protects against all risks except those specifically excluded. Others provide “named perils” coverage, which only includes the risks listed in the policy (like fire or theft). So yes, reading the fine print matters.
2. Business Interruption Insurance
This is the unsung hero of your BOP. Let’s say a fire breaks out, and your business has to temporarily close. Business interruption insurance helps cover lost income, rent, payroll, and even temporary relocation costs while you’re getting back on your feet. It’s basically your financial life raft during a storm.
3. General Liability Insurance
This one’s all about protecting you from those “oops” moments. If someone slips and falls at your shop or a customer claims you damaged their property, this coverage helps with the legal fees, settlements, and medical expenses. It also covers things like advertising injury and reputational harm.
So far, pretty solid, right?
What’s Not Included in a BOP?
While a BOP does a lot of heavy lifting, it’s not a one-size-fits-all suit of armor. Some business risks fall outside its standard coverage, such as:
❌ Professional Liability Insurance
Also known as Errors and Omissions (E&O) coverage, this protects you if you are sued for mistakes in your professional services. If you’re a consultant or accountant or offer advice-based services, this one’s a must – just not part of your BOP.
❌ Commercial Auto Insurance
If your business owns or uses vehicles, you’ll need separate Commercial Auto coverage. Your BOP doesn’t touch anything that happens on four wheels (or two, if you’re on scooters or motorcycles).
❌ Workers’ Compensation
If you have employees, Workers’ Comp is required in most states – and no, it’s not part of the BOP package. This coverage takes care of employees’ medical expenses and lost wages if they get injured on the job.
What About the Modern-Day Business Threats?
Glad you asked. Businesses today face risks our parents never even dreamed of. (Cyberattacks weren’t exactly on anyone’s radar back in the typewriter days.) While a standard BOP won’t automatically include these, you can – and often should – add extra protection:
Cyber Liability Insurance
Data breaches, phishing scams, ransomware – these are real threats to businesses of all sizes. If you store customer data, take payments online, or run a website (so… basically everyone), Cyber coverage is a wise add-on. Learn more about Cyber Protection.
Active Assailant/Workplace Violence Coverage
It’s heartbreaking, but unfortunately, violence in the workplace has become a real concern. Active assailant coverage can help with the aftermath of such incidents, including victim counseling, crisis response, and business interruption.
Employment Practices Liability Insurance (EPLI)
If an employee sues your business for discrimination, harassment, wrongful termination, or wage disputes, EPLI can help cover the legal costs. Again, not part of a BOP – but very much worth considering. Learn more about Employment Practices Liability insurance.
Is a BOP Right for Your Business?
A BOP is best suited for small to medium-sized businesses that operate out of a physical location (like an office, retail store, or warehouse), have assets they want to protect, and face general liability risks. It’s ideal for businesses like:
- Retail stores
- Professional offices (accountants, real estate agencies)
- Coffee shops or small restaurants
- Beauty salons
- Small manufacturers or wholesalers
If your business falls into this category, a BOP can be a smart and cost-effective choice.
But if your business operates in a high-risk industry or needs more specialized protection, you’ll likely need additional policies to fill in the gaps. That’s where a conversation with your insurance broker or agent comes in handy.
Final Thoughts
In a world full of surprises (and not always the good kind), having a Business Owners Policy is like having a well-stocked emergency kit for your business. It won’t solve every problem, but it will protect you from the big, budget-busting ones.
Whether launching your first startup or running a well-oiled small business machine, having the right coverage in place is one of the best investments you can make.