Glossary term
Business Owner's Policy (BOP)
A business owner's policy packages common small-business insurance coverages, often including property, liability, and business interruption protection.
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What Is a Business Owner's Policy?
A business owner's policy, or BOP, is a packaged insurance policy for small and midsize businesses. It commonly combines commercial property insurance, general liability insurance, and business interruption coverage in one policy.
A BOP is designed for common small-business risks, but it does not cover every exposure. Businesses often need additional policies or endorsements for vehicles, workers' compensation, professional liability, cyber risk, flood, or specialized equipment.
Key Takeaways
- A BOP packages several core business insurance coverages.
- It often includes property, liability, and business interruption protection.
- Eligibility depends on the insurer, industry, revenue, size, location, and risk profile.
- Coverage gaps can remain, especially for professional services, autos, employees, and specialty risks.
What a BOP Usually Includes
The package approach can simplify buying coverage and may cost less than buying separate policies. The coverage still has limits, deductibles, exclusions, and conditions that should be reviewed carefully.
BOP Coverage | Typical Purpose |
|---|---|
Commercial property | Covers business property, contents, equipment, or inventory after covered events. |
General liability | Helps cover certain third-party injury, property damage, or personal injury claims. |
Business interruption | Helps replace income after a covered disruption to operations. |
Optional endorsements | Adds coverage for selected risks not included in the base package. |
Fit for Small Businesses
A BOP can fit businesses with relatively standard premises, property, customer, and liability exposures. Retail shops, small offices, professional firms, and service businesses may be candidates, depending on underwriting rules.
A business with high hazard operations, large fleets, significant professional liability, complex contracts, or unusual property risks may need separate commercial policies instead of, or in addition to, a BOP.
What to Review
Review insured names, covered locations, property limits, liability limits, business income limits, coinsurance provisions, exclusions, deductibles, and any required endorsements. Contract requirements from landlords, lenders, vendors, or clients may require higher limits or additional insured language.
The Bottom Line
A business owner's policy is a practical insurance package for many small businesses. It is a starting point for common risks, not a complete risk-management plan by itself.