Business Owners Policy

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Business Owners Policy

Business Owners Policy

Business Owners Policy. As many as half of all businesses are involved in a lawsuit within any particular year, according to the U.S. Small Business Administration. At some future point, even the smallest business is subject to being called into court to answer to a charge of negligence or liability. Carrying business insurance such as a business owners insurance policy or BOP policy is important to continuing the growth and success of your business uninterrupted in the event of a claim, catastrophe, or peril.

Vandalism, theft, and fire are all known perils that can close your business down permanently. Many business owners find that their businesses simply cannot recover after a devastating loss. A business owner's policy protects your business from the risks faced in a perilous situation. This policy provides both liability insurance and property insurance in one custom-tailored package based on your business' needs. If you own a small or mid-sized business, this policy is right for you.

A business owners policy protects your company from lawsuits with rates as low as $27/mo. Get a fast quote and your certificate of insurance now.

Below are some answers to commonly asked BOP questions:

How Much Does A Business Owners Policy Cost?

The average price of a standard $1,000,000/$2,000,000 Business Owners Policy for small businesses ranges from $27 to $59 per month based on location, industry payroll, sales and experience.

What Types OF Businesses Are Eligibile For A BOP?

Many retail or wholesale operations, artisan contractors, or convenience stores, grocery stores and supermarkets with or without gasoline pumps are eligible.

Small to medium-sized apartment risks, condominium properties, offices, non-manufacturing businesses, and a limited number of service and processing risks are also eligible. Restaurants are also eligible. However, many insurance companies file their own deviations to the eligibility criteria and offer numerous options.

It is not unusual for some of them to insure some manufacturing classes and larger retailers under the Businessowners Coverage Form or an enhanced version of it.

How Does The The ISO Businessowners Coverage Form Protect Businesses?

The ISO Businessowners Coverage Form uses the homeowner's policy approach to package insurance coverages for eligible businesses. By selecting an amount of insurance on building and/or business personal property, the insured automatically receives a broad range of additional coverages with a single indivisible package premium. It is designed for the following:

  • A wide variety of retail risks, motels, processing, and service risks
  • Convenience food stores, grocery stores, and supermarkets with gasoline pumps
  • Laundries and self-storage facilities
  • Offices and office condominium associations
  • Restaurants under 7,500 square feet
  • Small specialized or artisan contractors
  • Small to medium sized apartment complexes and residential condominium associations
  • Wholesale operations

BOP Coverages

The ISO Businessowners Coverage Form is made up of three major sections:

What Does BOP Section I - Property Cover?

Buildings can be more than just a single building. he insurance company pays for direct physical loss or damage to covered property at premises listed and described on the declarations but only if the loss or damage is caused by or that results from a covered cause of loss:

Covered Building Property
  • Additions under construction if not covered elsewhere
  • Completed additions
  • Indoor and outdoor fixtures
  • Permanently installed machinery and equipment
  • Personal property you own as a landlord in furnished apartments
  • Personal property you own used to service or maintain the building or premises
Covered Business Personal Property (BPP)

Business personal property (BPP) is more than just the contents of a building. The following business personal property is covered when a limit of insurance appears on the declarations and when it is in the described building and within 100 feet of the premises or building while in the open or in or on a vehicle:

  • Exterior building glass you must cover if you are a tenant
  • Leased personal property you are contractually responsible to insure
  • Personal property you own and use in the business
  • Property of others in your care, custody, or control
  • The use interest in any improvements and betterments you made or acquired if you are a tenant

What Does BOP Section II - Liability Cover?

The insuring agreement requires the insurance company to pay amounts an insured becomes legally obligated to pay as damages because of bodily injury, property damage, or personal and advertising injury as long as this insurance provides coverage. Damages include care, loss of services, and death. This obligation includes a duty on the insurance company's part to defend any suit that seeks damages. The duty exists only if the loss is or may be covered and ends only when loss payments use up the limits of insurance.

The coverage form identifies situations that are covered as well as those that are excluded. It also specifically states that coverage applies to only incidents that are not carryovers from prior policies or prior policy periods. Much like a general liability policy, the liability coverage offered by a BOP:

  • Insures bodily injury and property damage liability and the legal obligations that arise from an occurrence. It also covers lawsuits and their associated costs. The limits of insurance selected should be high enough to handle serious claims. This coverage is subject to a number of exclusions.
  • It also covers personal and advertising injury liability and related legal obligations arising from an offense as well as lawsuits and their related costs. The limits of insurance selected should be high enough to handle serious injuries and the injured party's loss of earnings. This coverage is also subject to a number of exclusions.
  • Medical expenses coverage applies to medical expenses of individuals injured on your premises or due to your operations, without regard to fault.

What Does BOP Section III - Common Policy Conditions Cover?

These conditions apply to both liability and property:

  • Cancellation: The first named insured can cancel at any time by telling the insurance company that it plans to do so. The insurance company can cancel under only certain circumstances and with the advance number of days notice the circumstances permit, such as ten days advance notice for non-payment of premium or 30 days advance notice for any other reason. Notice periods vary, depending on the state where the named insured's business is located.
  • Changes: Changes to terms in the coverage form can be made only by endorsements the insurance company issues.
  • Concealment, Misrepresentation, or Fraud: Any of these acts by the named insured at any time with respect to a material fact that relates to the coverage provided voids coverage.
  • Examination of Your Books and Records: The insurance company has the right to examine the named insured's books and records that relate to this coverage form at any reasonable time and as often as necessary during the policy period and for up to three years after coverage ends.
  • Inspections and Surveys: The insurance company can conduct inspections and surveys at any time and they are for its benefit, with no expressed or implied warranties to other parties. The insurance company also has the right to not make inspections or surveys if it so chooses.
  • Insurance Under Two or More Coverages: The most paid if a covered loss occurs is the actual value of the loss, regardless of the number of coverages that apply to it.
  • Liberalization: Revisions to the coverage form that broaden coverage without an additional premium charge automatically apply if they become effective during the policy term or within 45 days before its inception date.
  • Other Insurance does the following:
    • Clarifies that this insurance pays only the portion of a loss that exceeds the amount due from the other insurance, whether collectible or not, but not more than the limit of insurance that applies
    • States that business liability insurance is excess over any other insurance that insures for direct physical loss or damage, any other primary insurance available, and any coverage that applies where the named insured is an additional insured on another coverage form or policy
    • Removes the insurance company's duty to defend in cases where this insurance is excess and where the primary insurance has the duty to defend. It also states that the insurance company has the option to assume the defense if no other carrier does so.
  • Premiums: The first named insured pays the premium and receives all returns. Policies issued on a continuous basis are not continued if the premium is not paid prior to the anniversary date. Premiums can be adjusted because of changes to the named insured's operations during the policy year.
  • Premium Audit: The policy is subject to audit after expiration. The final premium is based on the actual exposures during the policy term if the premium on the declarations is an advance or deposit premium. It details the conditions that apply to the audit and the requirements and responsibilities of each party.
  • Transfer of Rights of Recovery Against Others to Us: The insurance company receives the rights to recover from other parties that may have caused a loss it paid. The named insured can exclude certain entities from being subject to recovery efforts if it does so in writing before a loss occurs.
  • Transfer of Your Rights and Duties Under This Policy: The named insured's rights and duties cannot be transferred without the insurance company's written consent. A specific exception and condition applies if an individual named insured dies that involves appointing a proper legal representative.

Avoiding Myths When Purchasing A BOP Policy For Your Business

If you've been teetering on the fence and unsure if a BOP policy is right for you, then dispelling some of the myths surrounding these policies is a good move. Let's look at some common misnomers about business owners insurance policy policies.

Myth: BOP policies are for big businesses; my business is too small for a BOP policy.

This is an absolutely untrue statement. This type of policy is actually not an option for big businesses; it's tailor made for small and mid-sized businesses.

Myth: General liability covers property loss and business interruption costs.

This is also untrue. General liability insurance will not protect your business from either of these inherent risks. General liability insurance is only for acts that occur due to your actions or that occur on the premises of your business.

Myth: An umbrella policy is sufficient for covering business equipment losses.

Again, untrue. This type of policy covers personal liability, not business liability. It does sometimes extend to cover business equipment under a specific set of circumstances, but the coverage is limited.

Myth: Your business is safe since it is an incorporated business with just one location or operating from the owner's home.

Although the incorporation of your business does make it its own entity legally, any attorney worth his salt can easily finagle his way around the corporate "veil" to find a business owner personally responsible. With a business owners insurance policy policy, the liability portion of the policy protects your personal interests.

Myth: You're safe because you're incorporated, only have one location, or are home-based.

While incorporating will make your business a separate legal entity, any knowledgeable lawyer can find a way to remove that corporate protection and make you personally responsible, putting both your business and personal assets at risk. Incorporating offers zero protection against “tort” wrongs, which are judgments related to negligence, malpractice, car accidents and even slips and falls on your property. Luckily, the liability portion of a business owners insurance policy protects you against these risks.

Moreover, if you work from your home and rely on a conventional homeowner's policy to guard against business liability, you may find yourself sorely discouraged when your policy specifically rules out business operation in its terms. A better practice is to buy a separate policy so that your insurer understands that business and home are separated, and liability in one doesn't translate to liability in another.

Myth: Your work is conducted at your client's location, so a BOP policy is useless.

A BOP policy is essential if you are conducting business on site. Electricians, caterers, and others who work in people's homes put themselves out there as far as liability goes, and an accident at a client's home or damage to a client's property can leave you holding the bag without an effective BOP policy in place.

Myth: A BOP policy is not essential because the client doesn't require it.

A BOP policy isn't really about protecting the client. At its core, it protects your business. Even if the clients has no opinion about your insurance coverage, protecting yourself from litigation, claims, and loss means having the right coverage in place at all times. Moreover, buying a BOP policy for a short time and then dropping coverage can make your policy cost more in the long run.

Myth: Your contract with your client protects you from liability.

Think again. While having a strong contract in place is always a good idea, the truth is that lawyers can always find an angle to sue, despite the contract's language. Even if the claim has no merit, the cost of defending yourself in court can be astronomical and leave a dent in your business' financial health.

Myth: BOP policies are too expensive for my business.

The opposite is true. business owners insurance policy policies are affordable, and the risk they mitigate is priceless. Most people spend just a few hundred dollars per year for a basic BOP policy. This is a small price to pay for peace of mind in knowing that your business is protected. An independent agent can compare rates with multiple insurers to help you find the right coverage for your budget.

The Cost Of A Business Owners Policy

The type of business you own, the number of people who work for you, and your sales into how much you pay for bar insurance. The location of your business, your claims history, and other important factors also play a part. Work with your licensed commercial agent to find a mix of quotes from insurance companies. This can make it easy to get the right policy for your specific needs.

'Real Life' Court Cases Involving BOP Policies:

Insurance Legal Cases
Seaport Park Condo. v. Greater New York Mut. Ins. Co

The pipes of the rooftop cooling system of Seaport Park Condominium (Seaport) burst on January 12, 2004, allegedly due to freezing temperatures. Seaport had purchased a Businessowners Policy effective September 30, 2013, from Greater New York Mutual Insurance Company (GNY) providing coverage on the seven-story condominium apartment building.

A claim was submitted to GNY. Expert adjusters were retained to inspect the damage and determine the cause of loss. The burst pipes were believed to be in the interior of the unit and a conclusion could not be reached. At a meeting of all interested parties, it was agreed that Matco, Seaport's contractor, would remove the old tower and install a new one and would store the old tower for further inspection. Matco, however, destroyed the tower.

GNY denied the claim based upon a condition of the policy that required Seaport to preserve the damaged property for inspection. Seaport commenced an action against GNY. The motion court cited the absence of documentation stating that further inspection of the tower was needed and any obligation to store the cooling system once it was removed from the building when it ruled in favor of Seaport. GNY appealed.

The decision was reversed because the insurance contract was between Seaport and GNY and it required that damaged property be available for inspection. Agreements between Matco and Seaport and the error on Matco's part did not relieve Seaport of that responsibility.

(Seaport Park Condo. v. Greater New York Mut. Ins. Co., 39 A.D.3d 51, 828 N.Y.S.2d 381 (2007))

Phillips v. Parmelee

Daniel G. Parmelee or Aquila Group LLC (Seller) signed a conditional real estate report indicating that it was not aware of the existence of asbestos on the premises of an apartment building it was selling. Phillips (Buyer) acquired the property. Asbestos was discovered in the building by their contractor when it cut asbestos-wrapped ducts which dispersed asbestos throughout the building. Buyer sought action against Seller.

Seller insured the apartment building under a businessowners policy from American Family Mutual Insurance Company (American) at the time of the sale and so requested that American respond to the action. American denied coverage based upon the asbestos exclusion and filed for summary judgment. The circuit court concluded that American had no duty to defend because the exclusion precluded coverage.

The decision was appealed by Buyer, which alleged breach of warranty and negligence in the failure to report asbestos in the structure. The asbestos exclusion read [in part], "This insurance does not apply to ... "property damage" ... with respect to:

Any loss arising out of, resulting from, caused by, or contributed to in whole or in part by asbestos, exposure to asbestos, or the use of asbestos. "Property damage" also includes any claim for reduction in value of real estate or personal property due to its contamination with asbestos in any form at any time.

Buyer contended that the exclusion did not specifically state that it applied to the "dispersal" or "presence" of asbestos. Both the Appellate court and the Supreme Court of Wisconsin affirmed the decision based upon the wording “any loss” within the exclusion.

(Phillips v. Parmelee, 2013 WI 105, 351 Wis. 2d 758, 840 N.W.2d 713)

Small Business Economic Data & Insurance Regulations

Perhaps you have the next great idea for a product or service that you know will appeal to your local area. Maybe you want to contribute to the economic growth of your community. Whatever the reason is, if you're thinking about starting a small business, it's important to understand pertinent information relating to small businesses in the United States; namely economic information and insurance regulations. After all, if you want your small business to succeed, you have to understand the economic trends organizations of a similar size in your area.

Likewise, you want to ensure that your small business is well protected with the right business insurance and that you are in compliance with the rules and regulations that pertain to commercial insurance in your region.

Small Business Information

Read up on economic statistics and insurance information that relates to small business owners in the United States.

Small Business Economic Data In The United States

Here's a look at some information that was compiled by the Small Business Association (SBA) regarding the economic data that pertains to small businesses in the United States:

  • In 2015, small businesses in the United States employed an estimated 58.9 million American workers, or 47.5 percent of the nation's private workforce.
  • Largest shares = fewer than 100 employees. The small businesses that employed 100 people or less had the largest share of employment amount small businesses.
  • Employment increased by nearly 2 percent. In 2018, employment amongst small businesses increased by 1.8 percent, which is an increase of 1 percent from the prior year.
  • Increase in proprietors. In 2016, the number of small business proprietors increased by 2.3 percent.
  • In 2015, small businesses were responsible for creating 1.9 million net jobs. Organizations that employed 20 people or less had the largest gains, as they added an estimated 1.1 million net jobs.
  • There were 5.7 million loans that were value less than $100,000 issued by lenders in the United States in 2016. These loans were issued under the Community Reinvestment Act.
  • Small business owners that were self-employed at the incorporated businesses that they owned reported a median income of $50,347 in 2016.
  • Small business owners that were self-employed at the unincorporated businesses that they owned reported a median income of $23,060 in 2016.
Small Business Insurance Information

In the business world, there are many risks faced by company's every day. The best way that business owners can protect themselves from these perils is by carrying the right insurance coverage.

The The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight.

Commercial insurance is particularly important for small business owners, as they stand to lose a lot more. Should a situation arise - a lawsuit, property damage, theft, etc. - small business owners could end up facing serious financial turmoil.

According to the SBA, having the right insurance plan in place can help you avoid major pitfalls. Your business insurance should offer coverage for all of your assets. It should also include liability and casual coverage. The SBA recommends the following insurance plans for small business owners:

  • Commercial Property Insurance: In the case of an unplanned disaster - fire, flood, vandalism, theft, etc. - this type of coverage will help you avoid paying for the damage out of your own pocket. Even if you rent the property, you should still carry commercial property insurance.
  • Commercial Liability Insurance: In the event that a legal situation arises - a negligence lawsuit, for example - commercial liability coverage will provide financial protection. It will cover the cost of legal defense fees, court fees, and even moneys that may be awarded.
  • Commercial Auto Insurance: If you operate a vehicle for any activities that are related to your business - transporting and/or delivering goods, or meeting with clients - commercial auto insurance is legally required for businesses of all sizes, including small businesses.

Additional Resources For Small Business Insurance

Protect your company and employees with the right commercial insurance policies. Read informative articles on small business insurance coverages - and how they can help shield your company from legal liabilities.

Small Business Commercial Insurance

Your small business faces many potential disasters including: fire, floods, theft, equipment breakdown, lawsuits from clients or customers and current & former employees. Any many other risks you haven't even thought about.

A small business commercial insurance program should provide protection for both larger and smaller disasters. The obvious things like fire, flood and theft most business owners think about... but what if a hacker infects your computers with a virus - and files containing private customer information like credit card and Social Security numbers are stolen?

Who is going to pay to fix your customers credit rating etc...? Will your insurance pay for the cost? You need to know that.

Your commercial insurance program should cover events that can close down your company, or cause it to lose revenue. Anything less than that is not enough coverage. Commmercial insurance doesn't cover everything, and all policies have exclusions and limits.

You need a written plan that allows you to get your operations back up and running as quick as possible.

Business Owners Policy
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