A typical BOP insurance package helps protect against common risks, including third-party liability claims, property damage, and loss of income when a covered event temporarily disrupts business operations.
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Pro Tip
Business owner’s policy (BOP) insurance bundles general liability, commercial property, and business interruption coverage into one policy for small businesses.
Instead of purchasing each coverage individually, many small businesses use BOP insurance to get broad protection through a single policy—often at a lower cost. It may also include optional endorsements that expand your protection for industry-specific risks.
Key Takeaways
- Business owners policies (BOPs) combine general liability, commercial property, and business interruption coverage into a single commercial insurance package.
- BOPs are designed to address standard coverage needs for small businesses, so they may not be available to large or high-risk businesses.
- The average cost of business owner’s policy insurance is around $500 to $3,000 per year, depending on your company’s location, size, claims history, and industry.
- You can oftentimes save upwards of 10% on your business insurance premiums by purchasing a BOP rather than buying a separate policy for each type of coverage you need.
What is a business owner’s policy (BOP)?
A business owner’s policy is a commercial insurance package that bundles basic property and liability coverages together. This allows small business owners to manage their coverage more efficiently and file claims for most types of common losses under the same insurance policy. In addition, bundling policies together with a BOP tends to be cheaper than buying each type of coverage individually.
What does BOP insurance cover?
A standard BOP can cover first-party property repairs and legal fees, third-party repair and medical bills, and other expenses triggered by property damage or liability claims. Business owner policy insurance can generally be broken down into three distinct coverages: , , and .
General liability coverage
General liability insurance can cover various expenses if your business is held liable for an eligible loss to another person, business, or entity. Most policies cover the following types of claims:
- Medical expenses and legal fees can be covered when someone is injured at your business.
- If you are held responsible for causing damage to someone else’s property, this coverage can pay for property repairs and legal expenses if the property damage claim escalates to a lawsuit.
- Your legal fees can also be covered if your business is sued over an allegation of personal or advertising injury (think defamation or false advertisement).
Other types of losses may also be covered by general liability insurance, depending on your insurance carrier. For example, your policy may include “products-completed operations” coverage, which extends your bodily injury and property damage coverage to claims that occur away from your business premises but are still related to your business.
Commercial property coverage
Commercial property insurance can help pay to repair or replace your commercial buildings and the items stored inside them if they are damaged or destroyed by a sudden, unexpected event. Some BOPs insure your property against all sources of damage except those that are expressly excluded, while others only cover perils that are specifically named in the policy documents.
Named peril BOPs usually cover the following:
- Fire and lightning
- Explosions
- Wind and hail
- Smoke
- Damage from vehicles or aircraft that the business doesn’t own
- Riots and civil commotion
- Vandalism
- Automatic sprinkler leakage and some other types of damage from water or other liquids
- Sinkholes
- Sudden building collapse
- Volcanic eruptions
Business interruption coverage
Business interruption insurance—or business income insurance—takes care of various expenses that may arise whenever an event covered by your commercial property insurance inhibits your normal business operations.
Your business interruption policy may help you pay for the following:
- Lost revenue while your business is closed
- Mortgage, rent, lease, or loan payments
- Taxes
- Payroll
- Temporary relocation costs
- Training costs for employees who need to learn how to use new or rented equipment
The business interruption insurance portion of your BOP works with your commercial property insurance to help you recover after experiencing covered property damage. For example, if a fire causes significant damage to your office building, commercial property coverage can pay to fix the building, while business interruption coverage can pay to rent office space so you can keep working while you wait for repairs to be completed.
What isn’t covered by BOP insurance?
Certain losses and expenses aren’t covered by basic BOPs. The following list goes over some of the most common business owner’s policy exclusions:
- Workplace accidents
- Errors and omissions in the performance of professional services
- Vehicle accidents
- Data breaches and other cybercrimes
- Crimes committed by employees
- Equipment breakdowns due to sudden internal failures
- Floods and earthquakes
- War and nuclear hazards
- Wear and tear or other losses triggered by poor maintenance
Pro Tip
You may be able to address some risks that would otherwise be excluded by adding extra coverage to your BOP, such as commercial flood insurance.
Who needs business owner’s policy insurance?
Business owner’s policy coverage is generally designed for small-to-midsize businesses with low-to-moderate risk profiles. Larger and higher-risk businesses may not be eligible for coverage. For example, many insurers offer BOPs to companies with up to 100 employees and $5 million worth of annual revenue. Meanwhile, certain types of businesses—such as restaurants—may be denied coverage if they are considered too risky to cover under a BOP.
Below are examples of industries that commonly benefit from BOP insurance coverage:
- Automotive repair
- Contracting
- Financial services
- Food and beverage
- Health care
- Manufacturing
- Nonprofit
- Personal care
- Pet care
- Printing and publishing
- Professional services
- Real estate
- Retail
- Technology
- Wholesale
How much does a business owner’s policy cost?
The average cost of a business owner’s policy typically ranges from around $40 to $250 per month. By opting for a BOP rather than buying business insurance products separately, you may save 10% or more on your premiums.
Ultimately, your BOP rates will vary based on several different cost factors, including the following:
- Selected coverage limits
- Claims record
- Industry
- Annual revenue
- Number of employees
- Business location
BOP insurance vs. general liability insurance
Standard BOPs automatically come with general liability insurance. If you qualify, you won’t need to buy it separately. But standalone general liability insurance may be preferable in some cases. For example, if you work remotely and don’t own any commercial equipment besides a computer you could afford to replace out of pocket, you can likely save money by skipping the commercial property coverage included within a BOP.
Optional coverage you can add to a BOP
Commercial insurance carriers often allow you to buy additional coverage types for your BOP, potentially enabling you to cover all of your company’s most prominent risks under a single insurance policy. Coverage options can vary by the insurer, but here are some examples of coverages you may be able to add to your business owner’s policy:
- Workers’ compensation insurance
- Commercial auto insurance
- Professional liability insurance
- Cyber liability insurance
- Commercial umbrella insurance
- Employment practices liability insurance (EPLI)
- Employee benefits liability (EBL) insurance
- Commercial crime insurance
Business owner’s policy insurance at a glance
- A business owner’s policy is an insurance bundle designed to provide basic liability and business property coverage for small businesses.
- BOPs help simplify the comparison shopping and policy management processes for business owners. And it’s often cheaper to buy a BOP than to purchase all of the included coverage types separately.
- Standard BOPs include general liability, commercial property, and business interruption coverage.
- You may be able to customize your BOP by adding on coverage types like workers’ compensation, commercial auto, professional liability, or cyber insurance.
- Most small businesses would benefit from maintaining BOP coverage. Large companies and those with unique risk profiles may not even be eligible for BOPs.
- The average small business can expect to pay between $500 and $3,000 per year for a business owner’s policy.
How to save on a business owner’s policy
You can potentially lower the amount you have to pay for BOP insurance by:
- Paying your entire premium for the year at the beginning of the coverage period
- Taking measures to mitigate your losses—such as mandatory employee training and standardized safety protocols
- Picking a higher deductible for first-party property damage claims
- Comparing quotes from multiple insurance companies to find the best available deal on the level of coverage you’re looking for
The takeaway
A business owner’s policy can be a no-brainer for a small- to medium-sized company looking for comparatively inexpensive basic coverage for their business. From a customer slipping in your store to a fire destroying your equipment, a BOP gives you the essential coverage you need in a single convenient policy.
Frequently asked questions
Can you add cyber insurance to a BOP?
Yes, some commercial insurance companies allow you to add cyber insurance to a BOP.
Does a BOP include workers’ compensation?
No, BOPs do not automatically include workers’ compensation insurance. However, some insurance companies may allow you to add workers’ compensation coverage to your BOP.
Can a home-based business get BOP insurance?
Yes, business owners policies are available for home-based businesses.
Is leased office space covered by BOP insurance?
Typically yes, any damage you cause to an office space that you rent or lease should be covered by the general liability insurance portion of a BOP.
Can an LLC get a business owner’s policy?
A limited liability company may qualify for a business owner’s policy, but this may vary by insurer. LLCs often have moderate-to-high risk profiles, and risky businesses are not always eligible for BOP coverage.
Can you customize a business owner’s policy?
Yes, many insurance carriers allow you to customize your BOP by adding in crucial commercial insurance coverage types, such as workers’ compensation or commercial auto insurance.
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