BUSINESS OWNER'S POLICIES (BOPs): are insurance packages that provide both property and
liability coverage at one
affordable premium. These packaged policies are
available to most small and medium-size companies and
can be a good
alternative to purchasing separate policies for
liability and property insurance.
Large companies and businesses that are
considered high risk usually don't meet the criteria for
a BOP. The criteria for BOP eligibility include the size
of the premises, the required limits of liability, the
type of business and the extent of offsite activity.
Premiums for BOP policies are based on similar factors,
including business location, financial stability,
building construction, and security features and fire
What Does a BOP Cover?
A BOP includes property
protection for an office building and its contents as well as other people's
property brought into the office building. BOPs cover standard perils,
including fire and theft, although certain exclusions apply, such as damage caused
by floods and earthquakes.
Under a BOP, a business
selects the amount of liability coverage it needs based on its assets. Liability
coverage pays for the cost of defending the business in a lawsuit and pays
damages if the business is sued for injury or property damage. The
liability policy also pays the medical expenses of those injured, other than
employees, as a result of business operations.
A BOP provides coverage for both business
interruption and replacement costs if an emergency
disrupts or destroys the business. Business Interruption
insurance not only compensates for lost income and the
expenses incurred when a company is forced to vacate its
premises due to disaster-related damage, but it also
covers operating expenses, such as payroll, which
continue even when business activities have ceased.
Replacement-cost coverage pays to replace damaged or
stolen property, equipment and inventory without
deducting for depreciation.
In addition to the basic BOP
policy, businesses may purchase add-on coverage based on the
particular risks associated with the company. For example, a dry cleaner
might purchase additional coverage for mechanical breakdown, which
would cover the machinery the business relies on. A retailer with
numerous employees might carry coverage for employee dishonesty, which
covers loss of business property due to embezzlement, fraud or another
What you need to know about buying business insurance
When purchasing business
insurance it's important to be sure that your company is neither over
insured nor underinsured. List all company assets — including property,
equipment and inventory — to help you decide the amount of insurance you need.
An insurance agent or broker can help you identify risks and
determine the type of coverage needed in order to fully protect the company.