What Is a Business Owners' Policy, or a "BOP?"

A business owner's policy (BOP) is one of the most important investments a business could make. Having insurance can help protect property and other assets that could be costly to replace if something unexpected occurs. Insurance agents may recommend this type of policy, but knowing what it is and what it covers is key. A standard business owner's policy usually covers the below protections, with additional coverage as an option.

Who Benefits from a BOP?

If you have a business with 100 employees or fewer but have property and equipment, this could be the type of policy that would work well for you. It is not really designed for home-based businesses, but it is a good option for businesses with sales that bring in under $5 million a year.¹

Commercial Property

This covers property, multiple locations, equipment, machinery, and other inventory.

General Liability

If someone gets hurt on your property, this helps cover those medical expenses and/or property damage if one of your employees happens to damage someone else's property.

Business Income

Imagine an unexpected fire or storm prevents you from working at your primary place of business. In the event you have to relocate, this would help pay for the new location, or this would provide a continuation of income if you have to close temporarily.

Commercial Auto

Do you have vehicles in your business? Are you driving your personal vehicle for business? Furthermore, do you have employees driving on behalf of your company or driving their own vehicles? Commercial auto insurance will protect your interests. If your employees are driving their own vehicles, having a non-owner policy in place will protect them and the business as well.

The above are standard coverage options for a BOP, but the following additional options are also good to have or at least consider.

Crime Insurance

With theft, forgery, and fraud so prevalent, having crime insurance will help protect your business in the event you have a data breach, for example.

Equipment Breakdown

If you have a lot of equipment and machinery that is an integral part of your business, having equipment breakdown insurance could save you a lot of money. This policy covers all equipment, including any computer equipment used for your business.

Accounts Receivable

If you incur any losses from clients who do not pay their bills, you won't have to worry about cash flow problems. This insurance will help cover those losses and keep your operations running smoothly.

There are additional coverage options available for every type of business that can meet your needs. Speaking with an insurance agent can help you decide what types of coverage options should be included in a business owner's policy that will ensure your business remains operational year-round. It is important to consider all the options available in a BOP so you can tailor a policy to your needs. Your policy should be specific to your industry and work to make things more cost-effective for you, with everything rolled into one main policy.

1. TheBalance.com, January 26, 2022

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