What is a Businessowner's Policy?

 

Generally designed to appeal to small and mid-sized businesses, a business owner's policy (BOP) is insurance coverage consisting of several policies combined into one.  The advantage of buying a BOP is that it's a collection of policies protecting a business owner from the various property and liability risks most businesses face and it's sold at a discount from what you'd pay to assemble all the included protections separately.  These may include:

• Property damage or destruction from various named perils
• Liability protection
• Business interruption protection

Although coverage offered may vary from one insurer to the next, you may usually opt to add additional coverage to the basic BOP being offered with:

• Crime protection
• Protection against merchandise spoilage
• Protection against forgery and more

Qualifications 

Individual insurance providers decide if a business qualifies for a BOP, determined by such factors as: 

• Business location
• Size of business location
• Class of business
• Revenue

BOP Requirements

Not every business qualifies for a BOP and each insurance provider has its own requirements.  Many providers, for example, will only consider writing BOPs for companies that handle all their business operations on-premises.  There may also be limitations on business size, with primary business locations required to fall within certain size parameters.  Business classes that typically qualify for a BOP include:

• Apartment buildings
• Retail operations
• Office-based businesses
• Small restaurants

Certain businesses may qualify for what are known as "special considerations," to be determined between the insurer and the insured.  These may include additional coverage for mechanical breakdowns and computers.  BOPs typically do not cover worker's compensation, health insurance or disability insurance.  Coverage for these require separate policies.

Understanding Basic BOP Protections

A breakdown of the three basic protections found in a BOP include:

1. Property Insurance - Similar to homeowners insurance, the property insurance portion of a BOP covers the structure of the business property against losses from a list of named perils such as fire, lightning, explosions, storms, smoke, vehicle or aircraft damage and more.  Coverage also extends to any business-related property found within the covered business.  
2. Business Interruption Insurance - coverage against loss of income caused by a peril covered in the policy that disrupts business operation.  May also include expenses incurred from operating business from a temporary location.
3. Liability Protection - protection against losses from bodily injury or property damage caused by your business during normal business operations.  Could be damage from faulty installations or defective products.