A Business Owner’s Policy (BOP) is a comprehensive insurance solution tailored for small and medium-sized businesses, bundling major property and liability risks into a single package. This streamlined approach simplifies insurance management and can reduce costs compared to purchasing separate policies, as noted by the Insurance Information Institute (Triple-I).
Eligibility for a BOP
BOP eligibility is influenced by the nature and size of the business. Typically, businesses that qualify for BOPs have 100 or fewer employees and generate revenues of up to approximately $5 million annually. Certain high-risk industries, such as restaurants, may not be eligible due to their specific operational risks.
Coverage Provided by a Standard BOP
A standard BOP usually includes the following types of coverage:
- Property Insurance: Covers buildings and contents owned by the business.
- Business Interruption Insurance: Compensates for lost income and covers operating expenses if the business is temporarily halted due to a covered event.
- Liability Protection: Protects the business against legal claims of bodily injury, property damage, and advertising injury.
Limitations and Additional Coverage Needs
While BOPs provide broad coverage, they do not cover everything. Notable exclusions include:
- Professional Liability Insurance: Protects against claims arising from professional services provided.
- Auto Insurance: Covers vehicles owned and operated by the business.
- Workers’ Compensation: Provides benefits to employees for work-related injuries or illnesses.
Additionally, BOPs typically have lower coverage limits compared to standalone policies. Small businesses also face unique risks that might not be included in a standard BOP, such as:
- Cyberattacks: Coverage for data breaches and cyber incidents.
- Active Assailant Incidents: Protection against violent incidents on business premises.
- Employee Practices: Coverage for issues related to employment practices, such as wrongful termination or discrimination claims.
Given these limitations, it’s crucial for business owners to assess their specific risks and consider augmenting their BOP with additional coverage to ensure comprehensive protection.
