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7 Min. Read

Business Owners Policy (BOP Insurance): A Complete Guide

Business Owners Policy (BOP Insurance): A Complete Guide

Preparing for the unexpected will help ensure you’re protected. A business owner’s policy might be the perfect option.

Taking out insurance coverage will protect yourself and your business as a whole. Sometimes things can happen that affect the way you're able to operate. Preparing for the unexpected will help ensure you’re protected if the worst happens.

Here is everything you need to know about a Business Owners Policy.

Here’s What We’ll Cover:

What Is Business Owners Policy (BOP) Insurance?

How Much Does It Cost?

Advantages of Using a Business Owners Policy

Business Owners Policy Requirements and Special Considerations

Key Takeaways

What Is Business Owners Policy (BOP) Insurance?

There are different types of insurance coverages for all sorts of different situations. So how do you know which coverage will protect your business most? 

BOP insurance combines property and liability insurance into one coverage policy. This offers the ability to have custom insurance that’s tailored to a business or industry. Since different businesses have different needs, custom policies protect you when it matters.

A BOP helps cover claims that are the result of situations like theft or property damage. And since it's a combination of property and liability insurance, it covers claims that come from the operation of your business. Claims can arise from things like fire or even advertising and personal injury

What Does It Cover?

Since you can tailor your policy to business demands, they can vary depending on your needs. Things like location, industry, business size and the amount of coverage you need are all taken into account. But there are some general areas that most policies will cover.

Let’s look at what liability insurance covers and what property insurance covers. 

  • Liability insurance

General liability coverage protects from claims that come from another person or business. Things like damage to property, bodily injury and medical costs are usually covered. As well, liability protection will help to cover extra expenses like defense costs since a business can sometimes be sued. 

  • Property Insurance

When it comes to commercial property insurance, it's different from property damage. This area of your policy would cover property that you either own, lease or rent. And it can include buildings, any equipment you own, furniture or general inventory. 

Some policies also include Business Insurance. If something unexpected happens and it causes a disruption in the way you’re able to operate, your losses are covered. Things like loss of income, employee benefits such as payroll and other essential payments like rent.

Now, those are the common areas that would normally be covered under a business owner's policy. But as mentioned, coverage can also extend to other areas. 

  • Electronic data liability. This can cover your business operations if there is a loss of electronic data due to physical damage of property. For example, if one of your employees damages a server by accident that results in a loss of data. 
  • Advertising injury. Sometimes mistakes happen or you’re not fully aware of the damage that's caused. This can be the result of unintentionally using someone else's marketing or advertising ideas. Or situations like copyright infringement and defamation.
  • Professional liability. A client or customer could dispute the quality of a product or service that you provide. This is sometimes also known as errors and omissions insurance.

If you want coverage for absolutely everything under the sun that could possibly go wrong, you can add a type of umbrella insurance to your policy. This can be a good option if you service several big clients or your business is high-risk. The umbrella insurance will extend your maximum general liability limits. 

Is There Anything It Doesn’t Cover?

It all depends on the needs of your business and what you decide to include in your policy. 

Usually, it doesn’t cover things like professional liability or commercial auto insurance. If these are important areas you feel that you need to have covered, you might have to take out a separate policy. 

Take a look into exactly how your business operates and identify any potential risk areas. When you have a better understanding of what could go wrong, you can tailor your policy to what you need most. This will make sure you’re covered in case something happens. 

How Much Does It Cost?

The cost of your BOP insurance can vary significantly depending on a few factors. The size of your business, the industry that you operate, your location and the amount of coverage you need are all taken into account. Your risk level and any claims history are also taken into account when determining a price.

For example, a technology consultant in California could require insurance for business property up to a maximum of $30,000. An accounting consultant in New Jersey could have a similar need for their business equipment, but only up to $10,000. Their property deductible and general liability insurance limits are exactly the same.

However, the consultant in New Jersey has an annual cost that’s $300 more compared to the consultant in California. And this is even though their business equipment insurance is significantly lower. 

That’s a very simple example, but it shows how a policy can differ depending on different elements.

Advantages of Using a Business Owners Policy

Simply put, it’s a smart and convenient way to protect your business. By combining a liability policy with property insurance, you get a simplified way to cover everything you might need. Fire, theft, lawsuits, financial losses, data breaches and professional liability are just a few of the areas that can be covered. 

It’s also a much cheaper route to take compared to purchasing separate policies. Plus, since you can add different types of coverage, it can be more convenient depending on your specific needs. 

Business Owners Policy Requirements and Special Considerations

A business might not qualify for BOP insurance since some providers have different requirements. Similar to formulating the cost, your location, the size of your location, overall revenue and industry can all get considered.

Some insurance companies might also have specialized coverage. You can add additional coverage or optional coverage for things like crime, floods and vehicle insurance. 

For example, your policy might have specific coverage if you have merchandise that spoils or there is an equipment breakdown. Special considerations could also include coverage for natural disasters, such as earthquakes. But you would need to discuss coverage options with your insurance provider.

Limits for special considerations are often on the low end, but not every business will need them.

Key Takeaways

Running a business isn’t easy. There are so many different things to consider and sometimes it’s difficult to know where to start. But having a business owner's policy can help give you added peace of mind should anything go wrong.

If you’re still not sure if you need a BOP, there are a few questions you can ask yourself. 

  • Does your business have a physical location? It doesn’t matter if it’s out of your home, in a rented office or in your garage. The only thing that matters is that your assets get covered.
  • Is there any possibility that you could face a lawsuit? What if a customer slips and falls at your store or office? Not having a business owner's policy could lead to out-of-pocket expenses. 
  • Do you own anything that could get stolen or get damaged? Equipment, furniture, product inventory and even customer data can all be at risk. What happens if all your equipment becomes damaged or all your customer data gets stolen?

Asking yourself these questions is a good place to start if you’re looking into what coverage to include. 

Find more helpful articles for your business on our resource hub.


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