Business Owner's Policy
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Introduction: Business Owner's Policy

Introduction: Business Owner's Policy

A Business Owner's Policy (BOP) is an insurance bundle designed expressly for small-business owners. Insurance carriers package General Liability and Property Insurance together at a reduced yearly rate for businesses that qualify.

The combination of General Liability and Property Insurance prepares your clients for the future by protecting them from common liability and property risks. Many carriers also include Business Interruption Insurance (BII) in their BOPs, which reimburses your clients for up to a year of lost revenue if a covered event forces them to halt normal business operations.

What Does a BOP Cover?

What Does a BOP Cover?

To understand BOP, let's review the basics of General Liability and Property coverage.

General Liability Insurance protects your client when a third-party sues them. For example, a non-employee (e.g., a customer or a competitor) may claim that your client or your client's employee..

  • Created an unsafe environment that caused a physical injury.
  • Caused damage to their physical property.
  • Provided a product or service that caused bodily harm or property damage.
  • Inflicted non-physical damages through copyright or brand infringement.

General Liability coverage helps your client pay attorney fees, court costs, and witness expenses. It may also cover settlements, judgments, and any court-ordered compensation up to their stated policy limits. Though the policy is versatile, it won't cover employee injuries. Your client will need a Workers Compensation Insurance policy for that coverage.

Property Insurance offers two major kinds of coverage:

  • Buildings. Any business premises owned or rented by your clients can be covered. Coverage can also include additions, additions in progress, and outdoor fixtures.
  • Business personal property. This protects furniture, inventory, supplies, tools, and equipment owned by your client's business. With the appropriate endorsements, it can also protect a third-party's property while it's in your client's care.

A basic Business Owner's Policy will cover property damage caused by fire, theft, vandalism, and certain weather events. If any of these incidents forces your client's business to halt operations, the BOP's included Business Interruption Insurance will reimburse your client for their lost income.

Depending on your client's industry, you may want to investigate customizing your client's BOP to better fit their unique needs. For example, a manufacturer might want Pollutant Cleanup coverage (which pays for cleaning up pollutants after a covered property claim) in their BOP.

Who Is Eligible for a BOP?

Who Is Eligible for a BOP?

Not every business is eligible for a Business Owner's Policy. For starters, your client's business must be in a low-risk industry to qualify. Insurance carriers might also consider...

  • Company revenue. Businesses that earn less than $5 million yearly are usually eligible.
  • Size of primary location. Larger facilities mean more room for accidents, making the company ineligible for a BOP.
  • Number of employees. Because BOPs are only offered to small businesses, providers each have their own employee limit.