What Is a Business Owner’s Policy (BOP)?

A business owner’s policy (BOP) is a type of business insurance that combines multiple types of coverage into a single policy. BOPs typically combine coverage for both liability and property damage and can be tailored to meet the specific needs of a particular business. BOPs usually include general liability, commercial property, and business interruption insurance, among other coverages. 


Buying a BOP is typically less expensive than purchasing each coverage individually, and you can customize coverage types and limits to meet the unique needs of your business. However, because different insurers offer different types of business coverage, it’s essential to research each portion of a BOP before buying a policy.

Who Needs a Business Owner’s Policy?

A business owner’s policy is a customized insurance policy designed to help protect small to medium-sized businesses from various risks. This type of policy typically includes both property damage and liability coverage. Any company that owns property or interacts with the public can benefit from a BOP, including retail stores, restaurants, contractors, and service providers. 

In addition to its core coverages, other types of coverage can also be added or removed from a BOP to customize it based on the needs of a particular business, making it a versatile and cost-effective option for many business owners. BOPs aren’t typically required by law but are a good idea for any self-employed person or small business to protect against potential losses.

How Much Does a BOP Cost?

The cost of a BOP depends on numerous factors, including the type of business you own, its location, size, the type and value of property it holds, and the potential liabilities it faces. Generally, the cost of a BOP ranges from $500 to $3,000 per year, but this can vary by industry and other risk factors. 

It’s also important to note that while cost is certainly a factor to consider when buying insurance, it’s equally important to ensure that you have adequate coverage to protect your business in the event of unforeseen accidents or incidents. That’s why it’s always a good idea to consult with a licensed insurance professional to determine the right types and amounts of coverage for your business.

What Does a Business Owner’s Policy Cover?

One of the most significant advantages of a business owner policy is that it can be completely customized to meet the specific needs of your small business. Numerous types of coverage can be included, with coverage amounts and deductibles you can adjust based on your particular risks and budget.

Here are just a few of the coverages you can include in a business owner’s policy:

Commercial Property Insurance

Commercial property insurance covers any physical assets your business owns, including your building, equipment, and inventory. It covers damages caused by natural disasters, fire, theft, and vandalism. With commercial property insurance, you can avoid significant expenses to repair or replace business assets damaged or destroyed in a covered event.

Commercial property coverage is a key coverage to include in a BOP if you have business property (even if it’s just computers) that you rely on to run your business. If you include this coverage and something happens that makes your equipment inoperable or unable to contribute to your business, your insurance can help cover the cost of repairing or replacing the property.

General Liability Insurance

General liability insurance is one of the most common types of business insurance in the U.S. and one that pretty much any business needs. This type of insurance coverage is almost always included in a business owner’s policy and protects your business against claims of bodily injury, property damage, and personal injury brought by customers or members of the public. 

Examples of some of the most common hazards covered by general liability insurance include slip-and-fall accidents, accidental injuries caused by your company’s products or services, and damage to a customer’s property. These risks also represent some of the most significant potential liabilities that your business faces, so it’s important to understand your risks before deciding on a coverage amount.

Business Interruption Insurance

Business interruption insurance is another type of coverage often included in business owner policies where business owners depend on their business’s operating income to cover fixed business and personal expenses. This type of insurance can protect your business against losses if your operations are temporarily or permanently interrupted due to a covered event. 

Typically, business interruption insurance will cover lost income, ongoing business expenses, and other costs associated with a business interruption. This type of coverage can help ensure your business can reopen once the interruption passes.

Some examples of events that may be covered under business interruption insurance include natural disasters, fires, or other unforeseen circumstances that could cause severe damage or disruption to your company’s ability to conduct business. Unfortunately, pandemics and government shutdowns are typically not covered events.

Additional Business Owner’s Policy Coverage

While a standard business owner’s policy can provide a solid foundation of coverage for your small business, you may also require other types depending on your specific needs. Below are some additional types of coverage that may also be included in a business owner’s policy.

Cyber Liability Insurance

Cyber liability coverage is an insurance policy that protects businesses in the event of a data breach or other cyber attack. It covers the costs of notifying clients, regulatory fines, and legal fees. This coverage can also help businesses recover not only their data and/or ability to operate (if the attack impacted critical infrastructure) but may also protect against reputational damage. 

Cyber liability insurance is an excellent option for any business that accepts payments through its website or digitally stores sensitive or proprietary information, such as credit card numbers, social security numbers, or medical information. 

Professional Liability Insurance

Professional liability, also called errors and omissions insurance, protects businesses and independent professionals from financial losses due to alleged negligence or mistakes in their services. It covers legal fees, settlements, and court costs that arise if a client is damaged as a result of errors in your work. 

This type of insurance is particularly important for businesses providing professional services where mistakes can occur, such as architects, accountants, lawyers, and consultants. It can protect businesses against potential lawsuits that can otherwise lead to significant losses.

Workers’ Compensation Insurance

Workers’ compensation insurance provides coverage for medical expenses, lost wages, and rehabilitation for employees who are injured or become ill due to their jobs. This insurance can also protect your business from lawsuits related to workplace injuries. In most states, workers’ compensation is legally required for any business with employees. However, even if your business doesn’t have employees, you can still buy workers’ comp to protect yourself against losses if you get hurt or sick while working and can’t continue operating. 

If your business involves any type of physical labor, such as construction or manufacturing, or if you or your employees work in hazardous conditions, adding workers’ compensation insurance to your business owner’s policy is recommended – if not legally required. It not only safeguards your employees but also protects your business from any financial if an accident occurs.

Commercial Auto Insurance

Commercial auto insurance provides coverage for businesses that use vehicles for work purposes. This type of insurance can cover a wide range of vehicles, including cars, vans, and trucks. Commercial auto insurance policies typically include liability coverage, which can protect against damage and injuries caused by the insured vehicle. In addition to liability coverage, other coverage options may be available, such as collision and comprehensive coverage. 

Business owners may want to consider adding commercial auto insurance to their policy if they or their employees use company vehicles, if they use personal vehicles for business purposes (other than commuting), if they regularly transport goods or equipment, or if they have multiple vehicles that require coverage. By adding commercial auto insurance to their policy, businesses can help protect themselves against the financial consequences of accidents or other incidents involving their vehicles.

Commercial auto insurance is also important for people who use their vehicles as part of the gig economy. If you drive for Uber or Lyft, for example, your personal car insurance may not cover you if you get in an accident while driving for hire.