Business Owners Policy (BOP)

A business owner’s policy (BOP) has been compared to a homeowner's policy for business. BOPs were first developed in the 1970s and have become a very popular form of insurance for small to medium sized businesses. BOPs combine some of the basic coverages needed by a typical small business into a standard package at a premium that is generally less than would be required to purchase these coverages separately. Business owners also like the simplified nature of the package as opposed to buying a collection of small policies. The efficiency also appeals to insurance companies and allows them to offer a lower premium for the package.

One of the distinguishing features of BOPs is that most automatically include business income and extra expense coverage (subject to some limitations). A number of other coverages such as flood insurance or earthquake insurance or owned vehicle coverage and specialized liabilities are generally not included in BOPs.

Coverage

Description

Property insurance

covering buildings, equipment and inventory

Business interruption insurance

Covering losses that cause you to shut operations or reduce production for a time. Business interruption insurance can provide money to offset lost profits or to pay continuing expenses (typically for up to a year for insured losses).

Casualty or liability protection

Covering harm done by the employees or products to other people or their property

Crime insurance

Covering loss of money or securities resulting from burglaries or robberies or destruction, as well as losses from employee theft or embezzlement.

Liability insurance

Covering lawsuits arising from accidents (as when someone trips and falls on your business’s property) or when you sell a product that damages the customer’s property or you are accused of offenses such as slander, copyright or invasion of privacy.