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BUSINESS INSURANCE 101|PROTECT YOUR BUSINESS

Business Owner’s Policy Coverage Guide

5-minute read

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Kristin Vegh

Kristin Vegh

28 March 2023

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Though it may be but small, your business is fierce!

Every small business owner knows how much time and effort go into running what looks like a small operation. Any opportunity to simplify and get the most bang for your buck can be crucial to keeping you sane.

One such opportunity is through policy bundling. A business owner’s policy bundles a variety of insurance coverages under one tidy roof. But what exactly does it cover, and what are the benefits? Most importantly: Is it a good fit for your small business? Read on to learn more.

What is BOP Insurance?

A business owner’s policy — also known as a BOP — is typically a bundle of these three policies:

  1. General liability insurance
  2. Commercial property insurance
  3. Business interruption insurance

We’ll get into details about each of these coverage types later, so stay tuned. A BOP insurance quote may also be customizable, with additional coverages potentially available within the bundle.

This type of policy is designed to help small businesses get a wide array of essential coverage without juggling multiple policies. Eligibility is based on various factors, such as revenue, the property value, and what industry the business is in (we’ll get into that later as well).

What Does a BOP Policy Cover?

The best way to understand what’s covered by a BOP is to look at the three types of coverage it includes, as well as some of the extras sometimes offered. Let’s jump in.

1. General liability insurance.

General liability (GL) is a popular type of commercial coverage that’s essential in the event of third-party injuries and damages. While it’s not generally required by law, not having it could mean paying for those claims out of pocket.

It typically covers:

  • Third-party bodily injury. If a nonemployee is injured as a result of your work, your payout could go toward damages and medical expenses.
  • Third-party property damage. GL will generally cover damage your business has caused to third-party property.
  • Personal and advertising injury. This includes things such as libel and slander.
  • Claims resulting from defective goods.

General liability can also be highly customizable. You may be able to include various add-ons and endorsements so that it better fits your small business’s needs.

2. Commercial property insurance.

Also known as business property insurance, this type of coverage is particularly helpful for small businesses with valuable physical assets, such as equipment and inventory. It typically covers damage to these assets caused by the following:

  • Fire
  • Wind, storms, and snow
  • Vehicular damage to the business’s property
  • Sprinkler leakage and various other forms of water damage
  • Vandalism
  • Building collapse
  • Theft

It does not, however, cover damage caused by earthquake or flood, cyber fraud, or damage to vehicles. It’s important to check with your insurance provider about the specific circumstances that this type of policy is likely to cover.

3. Business interruption insurance.

Being forced to close up shop — even temporarily — due to damage or loss of use can be devastating for a small business. That’s where business interruption insurance comes in. If a small business is forced to cease operations in the event of arson, theft, or certain natural disasters, business interruption insurance could kick in and would typically cover:

  • Temporary relocation
  • Payroll
  • Fixed costs such as operational expenses
  • Loan payments and taxes
  • Closure due to damage to a nearby business
  • Training costs on new replacement equipment

This coverage doesn’t extend to earthquakes, floods, or public health events. It also won’t reimburse you for utilities, undocumented income, or broken items.

Customizations and add-ons.

Depending on your small business’s needs and industry, Simply Business® may have BOP insurance coverage extensions to ensure your policy is the right fit. These add-ons include:

  • Employee theft
  • Spoiled merchandise
  • Forgery
  • Equipment breakdown

BOP Insurance Requirements

In order to be eligible for a business owner’s policy, your business typically is required to be considered small. A “small business,” in this case, is considered one with fewer than 100 employees, or less than $5 million in annual revenue.

How Much Does a Business Owner’s Policy Cost?

Your business owner’s policy premium will depend on a variety of factors. These generally include:

YOUR INDUSTRY: Different industries carry different types of risks. A higher exposure to various risks could result in a larger premium.

  • COVERAGE LIMITS: As with any insurance policy, the amount of coverage you elect will impact your insurance costs. If your business has a lot of costly assets or specific risks, you may want to choose a higher level of coverage. This will be reflected in your premium.
  • LOCATION: Where your business is located — and where you conduct your business — matters! Different cities and states have different risk ratings.
  • SIZE AND AGE OF BUSINESS: The more employees you have, the more risk your small business typically faces. Additionally, newer businesses are often considered a greater risk than more established businesses. The size and age of your business, as a result, may be reflected in your premium.
  • PROPERTY VALUE: When it comes to the property portion of the policy, the value and type of property being insured will help determine the cost of your premium.
  • HISTORY: Any history of previous claims will be taken into consideration when calculating your premium.

The best way to figure out the cost of a business owner’s policy is to get a quote. Simply Business can help with that. Tell us a little about your small business using our free online quote tool, and we’ll help you build a business owner’s policy that fits your specific needs. We offer customized options with competitive pricing.

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What You May Need for a BOP Insurance Application

When applying for a business owner’s policy, you’ll likely need the following:

  • The name, location, and contact info of your small business
  • What type of business you have
  • How many employees you have, if any
  • Details regarding the assets and property you wish to insure, including their value
  • Where you conduct business (i.e., on- or offsite)
  • Your annual revenue, or at least an estimate

The insurance application may call for further information, depending on what your small business is, where you’re located, and other specifics.

Online applications can make the process a lot easier. Simply Business® has a free online quote tool that will guide you through the quoting and application process. Just answer a few questions about your small business, and we’ll have a quote ready for you in minutes. Find the right insurance for your particular business, and see if a business owner’s policy is a good fit for you.

Business Owner’s Policy vs. General Liability

A common question is: Is a business owner’s policy the same as general liability insurance? It’s common for a good reason! The two policies are not the same, but they have overlap. Essentially, general liability is one coverage usually included in a business owner’s policy, but it’s not the only part.

BOP insurance could be considered an enhanced alternative for small business owners seeking general liability with more features and coverage. It bundles multiple types of coverage a small business owner might need, and may end up being less expensive than purchasing the policies separately.

A Package Deal

For a small business, simplicity is everything. The fewer accounts and policies you have to buy and manage, the more time you can spend focusing on your small business. But that shouldn’t come at the expense of your insurance coverage.

A business owner’s policy can be a great way to get a lot of coverage against common risks, without the hassle of keeping up with multiple policies. Having separate general liability, business interruption, and business personal property insurance policies has the potential to cost you more than a bundle of the three policies.

So why not keep it simple?

Great things come in small packages.

Kristin Vegh

Written by

Kristin Vegh

After several years of working in insurance while also freelance writing, I've finally found where the two interests intersect. I'm a writer with Simply Business with an insurance processing background and a love of research.

Kristin writes on a number of topics such as small business trends, license reciprocity, and BOP insurance.

This content is for general, informational purposes only and is not intended to provide legal, tax, accounting, or financial advice. Please obtain expert advice from industry specific professionals who may better understand your business’s needs. Read our full disclaimer

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