Many businesses take a piecemeal approach to buying insurance. One policy for property insurance, another for liability insurance, and so on. Unfortunately, this approach can be difficult and time consuming, particularly for small- and medium-sized businesses. For these businesses, a Business Owners Policy, a BOP, may be an attractive alternative.
A BOP is a pre-packaged bundle of coverages that insurance companies offer to eligible small- and medium-sized businesses. BOPs are designed to provide a number of essential insurance coverages in a convenient and cost effective manner. BOPs typically provide:
- Property insurance to cover damage to buildings and contents;
- Business income (business interruption) insurance to cover the loss of income resulting from a covered loss that Disrupts business operations; and
- Liability insurance to protect against liability claims for bodily injury and property damage occurring on a business’s premises or arising out of its operations.
Depending on the insurance company, additional coverages may be included in a BOP, or added for an additional premium, such as:
- Cyber Liability
- Employment Practices Liability
- Valuable Papers and Records
- Personal and Advertising Liability
- Liquor Liability
- Equipment Breakdown
- Sale and Disposal Liability coverage for self storage facilities
Though BOP eligibility requirements can vary significantly among insurance companies, BOPs are typically limited to small- and medium-sized businesses, which are generally those with fewer than 100 employees and annual revenues of less than $5 million. BOPs may also not be available to businesses operating in specific industries or those with highly specialized or high-risk operations.
Alternatively, BOPs may not be the solution for some businesses, even those that are eligible for them. For example, some businesses may require higher limits or broader coverage forms that are not available in a BOP. There are also a number of coverages that BOPs do not provide, such as workers compensation, commercial automobile and professional liability insurance. Even with a BOP, additional insurance policies may still be necessary.
Since BOPs are customized insurance products, it is important to note that coverage options and features (limits, exclusions, etc.) can vary significantly among insurers. Unfortunately, the lack of uniform eligibility requirements, coverage options and policy features makes it difficult to understand and compare the various BOP options that may be available. An experienced insurance agent should be consulted throughout the process.
If you would like to learn more about BOPs or the various options that may be available to insure your business, contact us.
If you would like to subscribe to our newsletters please click here.