A business owner’s policy, or BOP, is a package of business insurance that usually bundles three things: property coverage, business income coverage and liability coverage. Small and medium-sized businesses that meet an insurer’s criteria, such as a home-based business or a company with only a few employees, often look at a BOP as a starting point.
Coverage depends on the policy and insurer. This article is general information, not a coverage determination.
What is a business owner’s policy (BOP)?
A business owner’s policy is a “package” product. That means several types of coverage come together in one policy, so you don’t buy each one on its own.
The National Association of Insurance Commissioners (NAIC), a group of state insurance regulators, says a BOP typically includes property, business interruption and liability insurance. Many insurers also tailor their BOPs to specific kinds of businesses, so one company’s BOP may look a little different from another’s.
For small businesses in Vidalia and across South Georgia, a BOP is often one of the first things that comes up when an owner starts exploring business insurance options. It can be a place to begin, and you can add more coverage as the business grows.
What does a BOP usually include?
Most BOPs are built around three main parts. Here is what each one generally does.
Property coverage. Property coverage helps protect the physical things your business uses. This can include:
- The building, if you own it
- Business personal property, meaning the things inside, such as equipment, inventory, furniture and computers
For a closer look at this part on its own, our page on commercial property insurance goes into more detail.
Business income coverage. Business income insurance is also called business interruption insurance. According to the Insurance Information Institute (Triple-I), it helps make up for income your business loses after a covered disaster.
It can also cover extra expense. That means the added spending that comes from running your business out of a temporary location while your regular space is being repaired.
Liability coverage. Liability coverage responds when someone claims your business caused them bodily injury or damaged their property. It also helps pay for your legal defense, up to the limits of the policy.
People often call this kind of protection general liability insurance. In a BOP, it comes packaged with the property and business income parts.
Add-ons for specific risks. A basic BOP can often be expanded. Triple-I notes that extra coverages can be added for specific risks.
For example, an outdoor sign is not covered unless coverage for it is specifically added. It’s a good reminder to read what your policy actually lists, not just what you assume it covers.
What does a BOP usually leave out?
A BOP covers a lot of ground, but it isn’t meant to cover everything. The NAIC says a BOP typically does not include:
- Commercial auto insurance, for vehicles your business owns or uses
- Workers’ compensation, which helps employees who are hurt on the job
- Health or disability insurance
- Professional liability insurance, which covers claims of wrongful professional practices
Workers’ comp is its own policy, apart from a BOP. Georgia also has its own workers’ compensation requirements, so look into those on their own if you have employees.
If your business drives vehicles, gives professional advice or has a team, you may need to think about these coverages alongside a BOP, not in place of one.
Which Georgia businesses often look at a BOP?
BOPs are designed for small to medium-sized businesses. Size alone doesn’t settle it, though. Only businesses that meet certain criteria are eligible.
According to Triple-I, insurers look at factors such as:
- The size of your premises (the space your business uses)
- The liability limits you need
- The type of business you run
- How much of your work happens offsite
The NAIC points out that a home-based business, or a company with only a few employees, may start with a BOP and expand its coverage as it grows.
Not every business fits. The NAIC gives the examples of a factory or a jewelry store, which usually need more customized coverage than a standard BOP offers. A business with bigger or more unusual risks may find that a BOP covers only part of what it needs, or that it isn’t the right fit at all.
What questions should you ask before choosing business insurance like a BOP?
Before you settle on a BOP, take a fresh look at your business. These steps can help guide your conversation with an agent or insurer.
Steps to think it through
- List what you own. Write down your building (if you own it), equipment, inventory, furniture and computers.
- Picture a shutdown. Ask yourself how your business would get by if a covered disaster closed your doors for a while.
- Think about who visits you. Customers, vendors and delivery drivers on your property can all raise liability questions.
- Note what happens offsite. If you work at job sites or customer locations, say so, since insurers consider offsite activity.
- Flag what a BOP leaves out. Vehicles, employees and professional advice may each need their own policy.
Quick checks before you decide:
- Does the policy list the property you actually use?
- Does the business income coverage include extra expense for a temporary location?
- Are items like outdoor signs covered, or do they need to be added?
- Do the liability limits fit the kind of work you do?
- Do you need workers’ comp, commercial auto or professional liability on top of the BOP?
Frequently asked questions
Is a BOP the same as general liability insurance?
Not quite. General liability is one piece of a BOP. A business owner’s policy packages liability protection together with coverage for your property and for income lost after a covered event. So a BOP usually gives you more than liability alone, but it still leaves some coverages out, and the details depend on the insurer.
Can a home-based business get a BOP?
Often, yes. The NAIC lists home-based businesses among those that may begin with a BOP and add coverage later. The insurer will still look at things like your type of business and how much of your work happens offsite before deciding whether you qualify, so describe your setup clearly.
Does a BOP cover my employees if they get hurt at work?
Typically, no. On-the-job injuries to employees are usually handled by workers’ compensation, which you buy as its own policy. Georgia sets its own workers’ comp rules, so if you have staff, look into those requirements apart from any BOP you are considering.
Can I change my BOP as my business grows?
In many cases, a BOP is a starting point you can build on. Insurers can add extra coverages for specific risks. As your business takes on more space, more people or new kinds of work, review your policy to see whether it still matches what you actually do day to day.
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Wondering whether a BOP fits your business? Talk with Zorn Insight to go over your options.
