Coverage GuideBOP vs. General Liability Insurance
Understand the difference between a standalone general liability policy and a broader Business Owners Policy.
Business Owner’s Policy
Understanding the Policy
What Is a Business Owners Policy?
A Business Owners Policy is a commercial insurance package designed for qualifying businesses. Instead of purchasing certain coverages separately, a BOP may combine several foundational protections under one policy.
The exact package varies by insurance company, but many BOPs are built around three major areas: protection for business property, protection against certain liability claims, and protection for lost business income after certain covered events.
Think of a BOP as a business insurance foundation.
It may cover several common exposures in one package, while additional policies or endorsements can be added when the business has needs that fall outside the standard BOP.
Eligibility varies based on factors such as the type of business, revenue, property values, location, payroll, square footage, prior claims, and the insurance company’s underwriting guidelines.
Built for Everyday Businesses
Who May Benefit From a Business Owners Policy?
A BOP may work well for many small and medium businesses with relatively standard property and liability exposures. Businesses can range from professional offices and neighborhood retailers to service businesses, wholesalers, and certain light commercial operations.
Retail Businesses
Boutiques, specialty stores, convenience-oriented retailers, and other qualifying storefront businesses.
Professional Offices
Consultants, administrative offices, real estate businesses, certain professional firms, and similar operations.
Service Businesses
Repair businesses, salons, studios, small service companies, and other eligible local operations.
Property-Based Businesses
Businesses that own or rent office, retail, warehouse, or other commercial space and need property protection.
Common BOP Protections
What Coverage May Be Included in a BOP?
BOP coverage varies by insurance company, but the following protections are commonly included or available as part of the package.
Commercial Property
May help protect business-owned property such as furniture, inventory, equipment, improvements, and, when insured, the building itself against certain covered causes of loss.
General Liability
May help with certain third-party claims involving bodily injury, property damage, and personal or advertising injury, subject to the policy terms and exclusions.
Business Income
May help replace certain lost income and ongoing operating expenses when business operations are interrupted because of a covered property loss.
Extra Expense
Depending on the policy, coverage may help pay certain additional expenses incurred to continue operating after a covered loss.
Premises & Operations Liability
May respond to certain covered claims arising from your business location or day-to-day operations, such as a customer injury at your premises.
Additional Optional Coverages
Depending on the business and insurer, additional endorsements may be available for equipment breakdown, cyber exposures, spoilage, employee dishonesty, hired and non-owned auto, and other needs.
Protecting Business Assets
Business Property a BOP May Help Protect
The property portion of a BOP can often be tailored around the physical assets your company depends on.
Furniture & Fixtures
Desks, shelving, displays, workstations, cabinetry, and other business furnishings.
Equipment
Computers, tools, machinery, office equipment, and other items used in daily operations.
Inventory
Stock and merchandise owned by the business, subject to the policy’s limits and valuation terms.
Tenant Improvements
Certain improvements or upgrades a tenant has made to a rented business location.
Business Buildings
For eligible owner-occupied properties, the building may be insured as part of the policy.
Outdoor Property
Some signs, awnings, fences, or outdoor business property may be eligible, depending on the policy.
One Policy, Multiple Protections
How Does a Business Owners Policy Work?
A BOP packages multiple coverages under one policy. Each part of the policy has its own limits, deductibles, exclusions, and conditions.
For example, a covered property claim may involve a deductible, while a covered liability claim may be handled under a separate liability limit. Business income coverage may also have its own waiting periods, time limitations, or calculation rules.
A BOP is not one unlimited pool of coverage.
The policy contains separate terms for different types of losses. Reviewing limits and endorsements is important when comparing options.
Everyday Business Situations
Examples of When a BOP May Be Useful
Coverage depends on the cause of loss, policy language, limits, exclusions, deductibles, and other terms. These examples are intended only to show common situations businesses may consider.
Customer Injury
A customer slips inside a store and alleges that the business is responsible for medical expenses and other damages. General liability coverage may respond if the claim is covered.
Damaged Business Property
A covered event damages equipment, furniture, or inventory at the insured location. Commercial property coverage may help pay for covered repair or replacement costs.
Temporary Business Closure
A covered property loss forces the business to temporarily suspend operations. Business income coverage may help with certain lost income and continuing expenses.
Damage to Someone Else’s Property
Business operations accidentally damage property belonging to another person or company. General liability may help if the event falls within the policy’s coverage.
Temporary Relocation Costs
Following a covered loss, the business may need to operate from a temporary location. Certain extra expenses may be covered depending on the policy.
Advertising-Related Claim
A business faces a covered claim involving certain advertising or personal injury allegations. Coverage may be available under the liability portion of the BOP.
Important Coverage Planning
A BOP Does Not Replace Every Type of Business Insurance
A Business Owners Policy can provide a strong foundation, but many businesses still need additional policies for exposures that are not included in a standard BOP.
Depending on your operations, you may also need workers compensation, commercial auto, professional liability, cyber insurance, employment practices liability, commercial umbrella coverage, inland marine, bonds, or other specialized protection.
Build Around Your Operations
Additional Insurance a Business May Need
The right insurance program should reflect what your company actually does, not simply the name of the business.
Workers Compensation
May be required when a business has employees, depending on state law and business structure.
Commercial Auto
Designed for vehicles owned, leased, or used for business purposes when appropriate for the exposure.
Professional Liability
May help protect businesses against certain claims involving professional services, errors, or alleged negligence.
Cyber Insurance
May provide coverage for certain data breaches, cyber incidents, notification costs, and related exposures.
Commercial Umbrella
May provide additional liability limits above certain underlying commercial policies, subject to policy terms.
Inland Marine
Can be useful for certain tools, equipment, property in transit, or property regularly used away from the main location.
Keeping the Business Moving
Why Business Income Coverage Matters
Property insurance focuses on repairing or replacing covered physical property. Business income coverage focuses on the financial impact of an eligible interruption.
When a covered property loss forces a business to reduce or stop operations, income may decline even though rent, payroll, loans, utilities, and other expenses continue.
Lost Business Income
May help replace certain income the business would have earned during a covered interruption.
Continuing Expenses
May help with certain ongoing expenses that continue while operations are disrupted.
Temporary Operations
Extra expense coverage may help with certain costs of continuing operations elsewhere.
Coverage Period
Coverage is subject to policy time periods, limits, conditions, and the cause of the interruption.
Policy Design
Choosing Limits, Deductibles, and Coverage Options
Price matters, but a business policy should also be designed around the value of your property and the financial impact of potential claims.
Property Limits
Consider the cost to repair or replace insured business property rather than relying only on its used or purchase value.
Liability Limits
Contract requirements, lease agreements, business size, customer traffic, and operations can influence appropriate liability limits.
Deductibles
A deductible is the amount the insured may be responsible for before certain coverage applies. Options vary by insurer.
Replacement Cost vs. Other Valuation
Property can be valued in different ways. Understanding the valuation method helps businesses avoid surprises after a covered loss.
Business Income Period
The time it takes to rebuild, relocate, replace equipment, and reopen can affect business income coverage needs.
Optional Endorsements
Endorsements can modify or expand the policy when the standard BOP does not fully address an important exposure.
Understanding Pricing
What Can Affect the Cost of a Business Owners Policy?
BOP pricing is based on the individual characteristics of the business and the insurance company’s underwriting approach.
Industry
Different types of businesses create different property and liability exposures.
Location
Geography, building construction, local hazards, and surrounding businesses may affect pricing.
Revenue
Business sales can be one factor used to measure the size and level of exposure.
Property Values
Higher building, equipment, inventory, and business property values can affect premium.
Claims History
Previous losses may be considered during underwriting.
Coverage Choices
Limits, deductibles, endorsements, and optional coverages can influence the final cost.
Business Insurance Learning Center
Learn More About Business Owners Policies
Explore common coverage questions and practical topics that can help you make more informed business insurance decisions.
Coverage Guide
Property Guide
Pricing Guide
Lease Guide
Policy PlanningFrequently Asked Questions
Business Owners Policy Insurance FAQs
Answers to common questions small and medium business owners ask when evaluating a BOP.
What does BOP stand for in insurance?
BOP stands for Business Owners Policy. It generally combines several common business insurance coverages into one policy for eligible businesses.
What is normally included in a Business Owners Policy?
Many BOPs include commercial property, general liability, and business income coverage. Exact coverage varies by insurance company and policy form.
Is a BOP the same as general liability insurance?
No. General liability is one type of coverage. A BOP may include general liability along with commercial property and other protections.
Who qualifies for a Business Owners Policy?
Eligibility depends on the insurer. Factors may include business type, annual revenue, payroll, building size, location, property values, and claims history.
Can a medium-sized business get a BOP?
Possibly. Many insurers offer BOP programs to both small and certain medium businesses, subject to underwriting guidelines and size limitations.
Do I need a BOP if I rent my business location?
You may still need one. A landlord’s policy generally does not replace insurance for your business property, liability, lost income, or tenant improvements.
Can a BOP insure a building I own?
Yes, for qualifying risks, building coverage may be available when the business owns the commercial property. Eligibility and valuation requirements vary.
Does a BOP include workers compensation?
Generally, workers compensation is purchased separately. Requirements vary by state and business structure.
Does a BOP include commercial auto insurance?
Commercial auto is generally a separate policy. Some BOPs may offer limited hired and non-owned auto liability endorsements, depending on the insurer.
Does a BOP cover professional mistakes?
Professional liability exposures are often excluded or limited under standard general liability coverage. A separate professional liability policy may be needed.
Does a BOP cover cyber incidents?
Some insurers offer cyber endorsements or packaged cyber coverage, but protection varies widely. A separate cyber policy may be appropriate for broader exposures.
Can a BOP cover inventory?
Business-owned inventory may be eligible for coverage under the property portion of the policy, subject to limits, exclusions, valuation terms, and covered causes of loss.
Can a BOP cover equipment and computers?
Business furniture, computers, equipment, and other property may be covered if included within the insured property and subject to policy terms.
What is business income coverage?
Business income coverage may help replace certain lost income and continuing expenses when operations are interrupted due to a covered property loss.
What is extra expense coverage?
Extra expense coverage may help with certain additional costs needed to continue operations or reduce the impact of a covered business interruption.
Does a BOP cover theft?
Certain theft losses may be covered depending on the property involved, cause of loss form, exclusions, limits, and policy provisions.
Does a BOP cover water damage?
Some types of water damage may be covered while others may be excluded. Coverage depends on how the damage occurred and the specific policy wording.
Does a BOP cover flood or earthquake damage?
Flood and earthquake are commonly subject to separate coverage arrangements or exclusions. Additional policies may be needed depending on the location and exposure.
How much does a Business Owners Policy cost?
Pricing varies by industry, location, revenue, payroll, property values, claims history, limits, deductibles, and other underwriting factors.
Can I increase my BOP liability limits?
Higher limits may be available depending on the insurance company. A commercial umbrella may also be considered when additional liability protection is needed.
Can my landlord be added as an additional insured?
Many insurers offer additional insured endorsements when appropriate. The exact wording and availability depend on the policy and insurer.
What information do I need to get a BOP quote?
You may need business operations, address, revenue, payroll, property values, square footage, ownership or lease details, prior insurance, claims history, and requested limits.
Can I add coverage to a BOP later?
Certain endorsements and coverage changes may be available during the policy term or at renewal, subject to underwriting approval and insurer requirements.
How often should I review my Business Owners Policy?
It is a good practice to review coverage at least annually and whenever your business changes locations, adds equipment, hires employees, increases sales, signs contracts, or changes operations.
Insurance Built Around Your Business
Explore Business Owners Policy Options
Best Formula Insurance can help small and medium businesses review their property, liability, business income, and other commercial insurance needs and explore available coverage options.