BOP (Business Owners Insurance)

Business owners have a host of assets, income sources, and properties under their ownership. It is to be noted that these possessions are subject to multiple threats, such as robbery, damage, and embezzlement, which business owners can mitigate with an insurance policy.

This is where Business Owners Policy (BOP) comes into the picture to help you in managing risk so you can sleep at night. Let’s understand this in detail here.

What is Business Owners Insurance (BOP)?

Business Owners Insurance (BOP) is an insurance policy that combines protection for all liability risks and properties in one bundle. This type of an insurance policy brings together the basic coverage that a business owner requires in one all-comprehensive package.

BOPs are often sold at a premium, but it turns out lesser than what business owners would pay in total when they get individual coverage. This kind of policy is designed mostly to suit the insurance needs of small and mid-sized business enterprises.

What does a Business Owners Policy include?

BOP coverages vary depending on the number of insurance providers. Most BOPs require businesses to conform to specific eligibility criteria to get coverage. Here are a few aspects that this policy covers:

Property Insurance

This component of a BOP provides protection only for damage caused by events listed in the policy, such as an explosion, fire, vandalism, wind damage and so on. Some policies provide “all-risk” coverage, but this benefit is available to special applicants. The type of properties covered include owned or rented buildings, outdoor fixtures, and any additions made to the property.

A BOP will also include business-owned or third-party-owned items but kept in possession of the business owner on a temporary basis. These items, however, must be stored in proximity of 100 feet of the business premises to qualify for coverage.

Business Interruption Insurance

BOPs usually come with business interruption insurance, which is a type of insurance coverage providing compensation for revenue lost during a year suffered as a result of an insured loss. It can also cover the additional expenses of operating the business from a temporary location.

A business interruption insurance under a BOP typically covers fixed costs, profits, training and commission costs, extra expenditures, employee wages, loan payments, taxes, and civil authority ingress. The coverage under this policy extends to the period specified in the policy, which is usually from the date when the peril occurred to when operability of the property is restored. 

General Liability Insurance

BOPs come with general liability insurance, which provides coverage for expenses incurred in fighting lawsuits filed by third-parties. Such lawsuits are filed when the third-parties suffers a loss from accidents, reputational injuries, client property damage, and product liability.

The general liability insurance is the first insurance policy that small business owners purchase because this policy holds significant importance in signing client contracts and commercial leases. The policy also reassures business owners that they will be compensated if there is damage or injury on their property.

What are the additional coverages available under a BOP?

A BOP might also provide vehicle coverage, flood insurance, and crime insurance. The insurance provider and business owner may set up an arrangement for additional coverage, depending on the situation. Accounts receivable, equipment breakdown, cyber liability, and employment practices liability are also included in a BOP (depending on the insurance company). Workers' compensation, professional liability, and disability or health insurance are items not covered under a BOP.

When considering such a policy, business owners should have the knowledge of different risks that they are likely to face. They should choose the coverage that suits their insurance needs and are more relevant to the industry they operate in. Whether it's a retail store, auto repair shop or an accounting

firm.

A BOP can significantly reduce the financial burden of business owners and give them peace of mind.