Business Owner Policy Basics

Business owner policies (BOPs) bundle several important property and liability coverages together at prices that are less expensive than purchasing each coverage separately. They’re considered must-haves for protecting the assets of small-to-mid-size businesses. 

How do business owner policies work? What types of coverages do they provide? Are there any exclusions? And how much might you expect to pay? I’ll briefly answer all of your questions here. 

A Closer Look at Business Owner Policy Coverages

A BOP can be tailored to each business’s unique needs and exposures, although core coverages include: 

BOP Property Insurance

The property portion of a BOP protects a business’s contents on a named-perils basis, whether owned by the company or in its temporary care, custody, or control. Perils usually include many found under a personal lines homeowner’s policy (e.g., fire, explosion, wind damage, vandalism, smoke damage, etc.). However, you can often purchase all-risk coverage at an additional cost. 

Related: How Much Homeowners Insurance Do I Need? 

BOP Liability Insurance

Suppose your company is legally responsible for harming or inflicting bodily injury or property damage upon others, which results from something that you or your employees did or failed to do in the ordinary course of business. In that case, your BOPs liability insurance may provide coverage.  

Examples of instances where BOP liability might come into play include defective products, faulty installations, or other product or service errors.

BOP Business Interruption Insurance

Fire is one of the most common types of claims filed by business owner policyholders, which can often require that businesses temporarily close their doors. 

During these times or many other catastrophes, the business interruption insurance provided under a BOP can help cover loss of income, in addition to extra expenses incurred while operating out of an alternate location. 

Additional BOP Insurance Options

Depending on the type of business you operate, and your unique set of exposures, business owner policies frequently offer a suite of endorsements that can further tailor coverage to your needs: 

• Crime insurance – Forgery, fraud, theft, etc.
• Vehicle coverage – Extends liability to leased, hired, or borrowed vehicles.
• Flood insurance – Rising water.
• Merchandise spoilage – Product that is no longer usable due to a covered claim.
• Equipment breakdown – Unforeseen and accidental breakdown of equipment required to stay in business, including computers.
• Accounts receivable – Unpaid invoices.
• Cyber liability – Protects against attacks to your business’s computer systems or other electronic data.
• Personal and advertising injury – Copyright infringement, libel, and slander.
• Employment practices liability – Wrongful acts performed during the employment process.

Are There Any Coverage Exclusions on Business Owner Policies?

In most instance, business owner policies do not provide coverage for:  

• Professional services liability
• Auto insurance for owned or rented vehicles
• Workers’ compensation for your employees
• Health and disability

The good news is that if you need these coverages, the professionals at IHS Insurance Group can help you find solutions that meet your budget! 

What Are Some Common Business Owner Policy Eligibility Criteria?

Like any other form of insurance, every carrier has its own set of eligibility criteria for its business owner policies, and unfortunately, not every business will qualify.  

While BOPs are ideal for retail locations, apartment buildings, small restaurants, and offices, companies will have different requirements regarding their revenue, physical size, location, and class. 

How Much Does a Business Owner Policy Cost?

What you pay for a business owner policy will be based on a variety of factors, including your company’s coverage requirements, the industry in which it operates, claims history, the number of employees, annual revenue, risk exposures, and the total cost of the business’s buildings, equipment, and contents.  

With these crucial details in mind, a business owner policy can range in price from less than $500 to well over $3,000, with an average of about $1,200. While the price might vary, keep in mind that your premium would almost certainly be higher if you purchased each of its coverages independently. 

IHS Insurance Group: Your Source for Business Owner Policies

Although business owner policies are must-haves for small-to-medium-size companies and provide a wide range of coverage options, they don’t cover every scenario, and they aren’t ideal for every type of business.   

Still, according to The Balance Small Business, a study from The Hartford found that “40% of small businesses will incur a property or liability loss within the next 10 years.” And when this occurs, a business owner policy is often their best option for remaining financially stable during those turbulent times. 

To find out if a BOP is right for you, reach out to the professionals at IHS Insurance Group! 

Need a FREE Quote or have questions regarding a business owner policy (BOP)? Please fill out our quick GET A FREE QUOTE form, and an agent will get back to you at your convenience!

We look forward to speaking with you today!