Business Owners Policy Coverage Guide
A business owners policy (BOP) is an insurance package that includes liability, property, and other coverages. It typically costs less than buying each coverage separately and can help save on insurance costs. Small businesses that own or lease property could benefit from a BOP and additional protections called endorsements.
Use this coverage guide to learn more about how business owners policies work and what coverages they include.
BOP liability coverages
The liability coverages on a business owners policy are typically identical to those on a general liability policy. They protect against third-party lawsuits and include customer injury, property damage, and more.
Liability protections with a BOP include the following:
Bodily injury and property damage
Bodily injury and property damage coverages protect against third-party claims related to your business operations. Incidents like a customer's slip and fall or a client tripping over tools could be covered by bodily injury. Property damage coverage applies when you or your employees damage another person's property.
Keep in mind that a BOP doesn't cover your employees' injuries. You'll need a separate workers' compensation policy.
Personal and advertising injury
Personal and advertising injury in a BOP covers businesses from claims of slander, libel, copyright infringement, and similar offenses. These claims can arise from advertising and marketing campaigns, as well as interactions with customers and other parties. This coverage can help businesses avoid costly legal fees and damage to their reputation.
Medical payments
Medical payments coverage on a business owners policy pays non-employee medical expenses for people injured on your property or resulting from your operations. It can help protect small businesses from costly medical bills and potential lawsuits.
Products-completed operations
BOPs can include products-completed operations coverage to protect businesses from claims related to products they've sold or services they've provided. If something you've sold or distributed causes a customer's injury, the product liability portion of this BOP coverage can help. It also covers injuries or damages caused by completed projects.
Damage to premises rented to you
Damage to premises rented to you is a business owners policy coverage for non-owned land, buildings, and other structures. For this coverage to apply, your business must be legally responsible for the damages.
BOP property coverages
The property coverages on a BOP protect your business's physical assets, such as buildings, equipment, and inventory, from fire, theft, third-party property damage, and other incidents.
Property insurance on a business owners policy can cover:
Buildings
A BOP includes buildings that your business owns or rents. It can help with losses from fire, wind, theft, or other covered events that damage your building's structure.
Completed additions, property maintenance tools, and permanently installed machinery and equipment can be covered if they're named on your insurance policy.
Business personal property
Business personal property insurance on a BOP covers lost, damaged, or stolen property used to run your business. Examples include computers, office supplies, furniture, and inventory.
This coverage is available even if you don't own a building.
Business interruption
A BOP's business interruption coverage can help your small business recover from financial losses caused by unexpected events that damage your property. It's also referred to as business income insurance.
If property damage forces your business to shut down temporarily, business interruption insurance can cover fixed expenses, such as a temporary workspace. It can also reimburse you for lost revenue your business would have earned if it remained open.
Common BOP endorsements
There are several optional coverages called endorsements that you can add to your business owners policy. These changes provide protection for specific perils.
Some common endorsements are:
Tools and equipment
Several tools and equipment endorsements are available for contractors. These endorsements can include tools belonging to the contractor and their employees or rented from a third party.
Equipment breakdown
Equipment breakdown coverage pays to repair or replace business equipment that breaks down. It typically covers electrical and mechanical machinery, as well as appliances.
Spoilage
Businesses that store perishable goods, such as food, can protect their inventory in case of contamination, power outage, and equipment failures.
Miscellaneous professional liability
This coverage protects against claims of negligence or mistakes related to a business's services. Consultants, interior designers, travel agents, and other professionals who offer advice should consider it.
Employment practices liability
Cyber
Businesses that store or process sensitive data, such as customer information, could benefit from this endorsement.
How much coverage do you need?
Your coverage needs and BOP cost vary based on specific features of your business. Typically, insurers recommend coverage amounts based on the following:
- Business type and profession: Contractors, offices, wholesalers, retail services, and restaurants can all benefit from a business owners policy. However, riskier professions usually need more coverage. Some businesses, like gas stations and bars, might be ineligible for a BOP.
- Property value: Your building, business personal property, and tools and equipment can determine your coverage needs. For example, if your business relies on expensive tools or equipment, you could choose higher limits on your BOP to cover potential damage or theft.
- Location: You might need more protection if your business is in a highly populated area or one prone to covered natural disasters, such as hail, lightning, wind, and tornadoes.
- Employees: More employees can mean more risk, especially regarding liability claims. If you have a large staff, selecting higher coverage amounts can protect your business.
Call or start a quote online to learn which coverage limits are appropriate for your business.
BOP in your state
Progressive BOP insurance is available in most states. We also offer coverage through other carriers.
Browse our business insurance state directory to learn more about BOP and other business insurance coverages.
What a BOP doesn't cover
A BOP protects against a variety of risks, but it doesn't cover everything. Some businesses will need other types of insurance for accidents involving:
- Employee injury: Businesses with employees need workers' compensation insurance to cover medical expenses, rehabilitation costs, and a portion of lost wages when an employee becomes injured or ill on the job.
- Negligence: Experts who give advice or offer services, such as lawyers and accountants, might need professional liability insurance to protect against claims of negligence or bad advice.
- Commercial vehicle accidents: If you or your employees get into an accident involving your business vehicles, you'll need commercial auto insurance to cover the damages.
Progressive offers many business insurance coverage options. Learn more about how we can help protect your business.
