Every small business faces several kinds of risks. One way to manage them in a simple, cost-effective manner is with a business owner’s policy (BOP).

A BOP features several types of coverage bundled into a single policy and is customized to meet the specific needs of different businesses. It’s designed to shield small business owners from claims ranging from fire damage and losses from theft to third-party bodily injury or property damage allegations or lawsuits.

Because they’re structured to provide a policyholder with savings, a BOP is often priced more affordably versus buying several individual policies, making it an efficient choice to protect your company and livelihood. 

You’ll often need a business owner’s policy to rent a commercial space or when inking new contracts with your customers, suppliers, or partners.

Furthermore, having a business owner’s certificate of insurance document to verify you’re insured inspires confidence among your customers and associates, proving yours is a viable organization that won’t disappear overnight if something goes awry.

What is a business owner's policy?

Business Owner's Policy Coverage Basics

A business owner’s policy (BOP) is a customized commercial insurance policy featuring multiple coverages designed to provide small businesses comprehensive protection that addresses their liability risks

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What Does a Business Owner’s Policy Cover?

A BOP combines coverages to protect you from third-party liability, property damage or loss, and business interruption. They are designed to meet your small business’s needs and risk management requirements.

Although they may vary by the insurance provider, a BOP usually includes the following: 

  • Commercial general liability (CGL) insurance protects your business and covers damages in instances of bodily injury or property damage to a third party. For example, if a customer or visitor to your retail store slips, falls, is injured and needs medical help, CGL is designed to pay for their medical expenses.
  • Commercial property insurance protects your business, contents, and your inventory against loss and damages resulting from theft, vandalism, fire, water damage, and natural disasters.
  • Business interruption insurance protects your business’s finances. It allows you to pay your employees and overhead costs if a disaster or accident forces you to close following an insurable loss while repairs to your commercial property are underway.

What Is Not Included in a Business Owner’s Policy?

As effective as a BOP is, there are some risks it does not cover.

While it’s vital to know the details of your policy, including the policy’s coverage limits and what the exclusions are, small business owners often explore additional coverage options to add to a BOP to address any specific risks they face. 

A BOP does not include protection for things like professional liability, discrimination lawsuits, employee injuries, criminal acts, coverage for business vehicles, or health or disability insurance.

What Optional Coverages Can You Add to a Business Owner’s Policy?

Business owners can add optional coverages, also known as endorsements or riders, to increase their protection and create a more robust policy. 

Some common add-ons may include: 

  • Commercial crime insurance: Covers losses due to internal theft, including forgery, fraud, and other acts of employee dishonesty.
  • Professional liability insurance: Also called errors and omissions (E&O) insurance, professional liability coverage shields you from allegations of professional negligence, misconduct, mistakes, or failure to deliver a service as promised.
  • Tools and equipment insurance: Whereas commercial property insurance covers your office, restaurant, or warehouse, tools and equipment insurance is a form of property coverage that reimburses you to repair or replace transportable tools or equipment if lost, stolen, or damaged by fire or water. For example, a general contractor or handyperson who travels to various job sites should carry this type of coverage.
  • Commercial auto insurance: Covers damages to any vehicle used for business purposes, including cars, vans, trucks, and trailers. It typically includes coverage for an injured driver’s medical expenses. If you rent or lease vehicles for your company or rely on your employees to use their vehicles for business purposes, adding optional hired and non-owned commercial auto coverage to your policy is recommended.

What Kind of Small Businesses Should Have a Business Owner’s Policy?

Accidents, mishaps, threats of legal action, and disasters can happen to any small business owner anywhere, anytime. A BOP is best suited to small business owners with relatively low risks and straightforward insurance requirements.

Notably, a BOP can provide you with financial support if things go wrong and are worthwhile for business owners that:

  • Own, lease, or rent a commercial property
  • Have inventory or assets to protect
  • Face the possibility of third-party lawsuits or allegations of wrongdoing by the nature of their businesses

A BOP is not exclusive to any one industry or type of business. It applies to various organizations and enterprises, from hospitality, financial services, technology, health and wellness, construction, manufacturing, business consulting, and more.

How Much Does a Business Owner’s Policy Cost?

An all-in-one business owner’s policy is an economical solution to paying for multiple individual policies.

Get a free quote for a business owner’s policy by completing an online application with Zensurance. Through our proprietary technology and partner network of more than 50 insurance providers, our licensed brokers can find you a low-cost policy and customize it to suit your requirements.

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About the Author: Jon Hogg

Jon Hogg is the Senior Team Lead, Renewals, at Zensurance.