What is a Business Owners Policy for Small Business?

A business owners policy (BOP) is a “package” product that typically includes property, business interruption/continuation and liability insurance.

Sometimes, purchasing a BOP can be a less costly option than buying individual policies. A home-based business or a company with only a few employees may start out with a BOP and then expand coverage as the company grows.

However, a BOP typically does not include commercial auto insurance, workers’ compensation, health or disability insurance or liability insurance for claims of wrongful professional practices. 

A business owners policy generally combines the following coverage types into one convenient bundle:

  • Commercial property insurance—Covers property losses from common perils, which is an event or situation that causes property damage or loss. It also covers office equipment, furniture, inventory, machinery, raw materials, computers and anything else that is vital to business operations.
  • General liability insurance—Covers a company’s legal responsibility for any harm it may cause to others, up to the policy limit. It also covers attorney fees and medical bills for anyone injured by the company.
  • Business interruption insurance—Reimburses for loss of income if a covered disaster interferes with the successful operation of the business.

Business Owners Policy Explainer Video

Small businesses need insurance.
Is a BOP the right coverage for you?
Find out in this overview video.

Securing small businesses with a Business Owners Policy

Don’t think you need a Business Owners Policy?

Small business owners have a lot to consider when choosing insurance that fully protects their business. A Business Owners Policy bundles several types of coverage in one package, similar to the way a homeowners policy works, but instead is designed for small and midsize businesses.

Not every small business is a good fit for a BOP. Businesses that have the following characteristics are ideal candidates for a BOP:

  • Operate in a physical location, whether home-based or outside the home
  • Have assets that can be stolen, including products, cash, furniture and digital property
  • Are at a high risk for lawsuits
  • Employ less than 100 employees and have less than $5 million in sales

What does a Business Owners Policy cover? Find out in this video.

You’ve worked hard to start and grow your small business and know insurance can protect all your hard work.

Who needs a Business Owners Policy?

Business Owners Policies are ideal for small-to-medium businesses (including home-based  businesses) that want comprehensive business insurance packaged into a single policy tailored to their specific needs.

Not only does business owners insurance cover general liability requirements, but it also helps to bridge the gap to protect against other risks that threaten your business.

For example, assume you own a computer repair shop. In the dead of night, thieves break in and steal equipment belonging to your customers. They also steal thousands of dollars of equipment belonging to your business, such as tools, replacement components, and testing devices.

The only losses covered by general liability insurance would be those related to your customers. You would be out the thousands of dollars in lost equipment, as well as any damages done to your business.

In contrast, a business owners policy would cover both your customers and your business. Sure, you’d have a minor hiccup to overcome, but you’d also be able to get back to work quicker, and with little out-of-pocket cost to you.

And, depending on your endorsements, you could also be protected from any subsequent identity theft or lost income as a result of the break-in.

Small business insurance without the hassle.

Spending time answering question after question about your business just to obtain the insurance you need is simply a waste of time. That’s why we’ve made this process both seamless and stress-free. Coterie offers Business Owners Policies for small businesses that can be purchased on a monthly, or annual basis.

Common Questions about Business Owners Policies

Business owners policies are designed to be custom-tailored to meet the unique needs of your small business. In addition to choosing the type of coverage you want and need, you can add optional endorsements to extend your policy’s coverage to protect against a broader range of risks and perils.

Let’s break down some of the common questions about a Business Owners Policy.

What is a Business Owners Policy?

You’ve worked hard to start and grow your small business and know insurance can protect all your hard work. The problem is: comprehensive coverage requires a multitude of different policies — unless you purchase a Business Owners Policy.

Think of all the things that make up your small business. Your building, equipment, tools, inventory, employees, and reputation are all vital to the success of your business. As a responsible small business owner, you want to protect its assets.

However, adequately insuring and protecting your business can be a challenge — or downright daunting — and often requires a smattering of different insurance policies and products, such as:

  • General Liability insurance: to protect against bodily injury claims and property damage
  • Professional Liability insurance: to protect your business from errors and omissions and lawsuits from advice, reports, work, or opinions you provide.
  • Property insurance: to protect against damage caused to your building and other tangible assets
  • Business Income: makes your income statement whole again from lost net income suffered as a result of damage to property
  • Equipment Breakdown: covers damage to your property resulting from an equipment failure

Worse, each of these individual policies cost a monthly or annual premium, which can quickly add up to a hefty bill.

Unless you opt for a Business Owners Policy instead.

A business owners policy, or BOP, is a comprehensive insurance policy that combines general liability insurance with coverage for your building and contents — and then some.

In other words, business owners insurance provides you with all the coverage you need in a single easily-managed policy with one premium to pay.

Even better, because you’re bundling multiple types of coverage together, you’ll typically pay less for a business owners policy than if you purchased each bit of coverage separately. Win/win!

Do I need a Business Owners Policy?

If you own a building for business purposes, have significant business property, or are at risk of being sued for accidents or harm, you need a BOP. You should also strongly consider a BOP if you or your business would not be able to withstand a loss of income when a Property loss occurs.

What types of businesses need a Business Owners Policy?

Most businesses would benefit from the coverage provided by a BOP. In general, small-to-medium businesses should consider purchasing a BOP who have Business Personal Property, inventory, equipment, or, have either invested in tenant improvements or own their building.

Do I need a Business Owners Policy if I work from home?

You may. If you have sizable business assets or store business property off-premises, a BOP provides coverage in the event something happens to your business property. A BOP also protects you from claims of bodily injury if customers or clients visit your property and get hurt, and claims of reputational harm if you’re accused of libel, slander, or copyright infringement. Additionally, BOPs provide income replacement in the event you cease operations, reduce capacity, or need help keeping your business running.

Check out this blog post: 7 Examples Why Your Home-Based Business Needs Business Insurance

Do I need Professional Liability insurance with a Business Owners Policy?

By default, a BOP policy doesn’t include protection against Professional Liability claims for financial or economic damages from bad advice or omissions in your work. However, you may add Professional  Liability protection through an optional endorsement, or rider, to your BOP.

Why is a Business Owners Policy considered versatile?

BOPs may be enhanced and custom-tailored to fit your exact needs through optional riders or policy endorsements. Endorsements may add coverage fo water backup, Liquor Legal Liability, Hired/Non-owned Auto Liability and other threats specific to your business and industry.

I don’t own property. Do I still need a BOP?

If you’re renting or leasing property, you may opt to forego the business property component of a BOP, while still enjoying the other protections afforded by the policy, such as protection for your business personal property.

Do I need business insurance if I have an LLC?

Yes, you definitely need coverage if you have an LLC. That way, if a claim arises, your small business insurance policy will cover it instead of your own bank account.

What are some endorsements that I should consider as part of my Business Owners Policy?

In addition to liability and property coverage, business owners insurance can be enhanced through optional add-ons called endorsements or riders.

Endorsements allow you to purchase additional coverage beyond what’s typically included in a business owners policy. These endorsements allow you to customize your coverage to protect against the unique risks that threaten your business.

Common business owners policy endorsements include:

  • Professional liability insurance: protects against claims from customers or clients alleging a mistake or a failure to adhere to your contract
  • Water backup: protection from water backups and sump pump failures (though does not include cover damage from flooding)
  • Cyber liability or data breach insurance: covers identity theft, data loss, malware, and other events related to your computers and network
  • Employment practices liability insurance (EPLI): coverage that protects against employee claims asserting their legal rights have been violated, such as wrongful termination and sexual harassment. 
  • Business interruption insurance: an endorsement that covers ordinary and extra expenses following an interruption to your regular business, such as relocating after a fire or natural disaster

By custom-tailoring your business owners policy through the addition of endorsements, you can increase your coverage without paying for protection you don’t need.

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