Buy Business Owners Policy

A Business Owners Policy (BOP) is a type of insurance package that combines several different types of coverage into one policy for small to medium-sized businesses. It typically includes coverage for property damage, liability, and business interruption.

The policy may also include coverage for additional exposures such as crime, equipment breakdown, and cyber liability. BOPs are designed to provide comprehensive coverage for a wide range of business risks at an affordable cost.

They are often customized to meet the specific needs of the business and can be tailored to include additional coverage options if needed.

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.

ISO publishes rate tables in the commercial lines manual. Provisions for credits, increased limits, etc., are made. Individual companies may employ variations by filing their own unique rating schedules.

Charges are made for the property items based upon the construction, occupancy, protection class, and limits for each item. There is no separate charge made for the business income coverage.

The liability rating process is based upon classification of the operation, the limit of insurance selected, and the rating territory of the risk.

No charge is made for other coverages that are part of the BOP, but optional coverages must be purchased. Increased additional coverage or coverage extension limits and some endorsements require additional premium charges, and deductible and reductions in coverages result in premium reductions.

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.

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

Buildings

Buildings can be more than just a single building. The 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:

• Buildings and structures at the premises described in the declarations
• Completed additions
• Permanently installed fixtures
• Machinery and equipment
• Personal property owned by the landlord in apartments or rooms furnished by the insured as landlord, and common areas
• Outdoor fixtures
• Personal property owned by the insured used to maintain or service the buildings and structures on the premises, including fire-extinguishing equipment, outdoor furniture, floor coverings, and appliances used for refrigerating, ventilating, cooking, dishwashing, and laundering.

The following items are also covered as part of the building but only if they are not separately covered by other insurance:

• Additions under construction
• Alterations and repairs
• Materials, equipment, supplies and temporary structures on or within 100 feet of the described premises used for making alterations or repairs

Business Personal Property

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.

The following items are considered business personal property if they are in or on the buildings at the described premises or in the open:

• Property owned by the insured and used in the business
• Property leased by the insured for which the insured has a contractual responsibility to insure
• Property of others in the insured's care, custody, and control but only to the extent of the insured's legal liability plus the insured's cost of labor, materials or services on the property
• Tenant's improvements and betterments

Property Not Covered

A number of types of property are not covered:

• Aircraft, autos, motor trucks, and other vehicles subject to motor vehicle registration
• Bullion (available only through the burglary and robbery optional coverage)
• Money and securities
• Contraband; land, water, growing crops or lawns; outdoor fences; radio or television antennas, including satellites
• Detached signs (except as provided for under coverage extensions); trees, shrubs, plants (except as provided for under coverage extensions)
• Watercraft (including motors and accessories) while afloat

Additional Coverages Provided

There are 18 additional coverages in the BOP. Most of the coverages are similar to additional coverages in the commercial property forms such as debris removal, preservation of property, fire department service charge, collapse, pollutant coverage, increased cost of construction, glass expense, fire-extinguishing recharge, and tear out to stop water damage. Most of these coverages have a dollar limitation or other explanations that are also similar to the commercial property coverage.

Two crime coverages are also automatically provided. Money orders and counterfeit money coverage and forgery coverage are provided for fairly low limits.

The two most important additional coverages are business income and extra expense. These are included without dollar limits; instead, coverage is limited to the actual loss sustained for up to 12 months.

These two coverages can mean the difference between an insured business being able to re-open following a loss or being forced to close permanently. Coverage is also provided for business income from dependent properties and loss of business income due to civil authority actions.

Coverage Extensions Provided

The coverage extensions are similar to those in the commercial property forms. They are newly acquired or constructed property, business personal property off-premises, outdoor property, personal effects, valuable papers and records, accounts receivables, and business personal property in portable storage units.

All are subject to small limits, but the limits can be increased on the declarations page.

Optional Coverages Available

There are four optional coverages built into the BOP. A limit must be entered on the declarations page for the particular coverage to be activated. The coverages are: outdoor signs, money and securities, employee dishonesty, and mechanical breakdown.

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.

Business Liability Limits

The declarations page does not list all of the applicable limits. It lists only three limits. The general aggregate and products-completed operations aggregate limits are not shown but they still exist. This is an important warning—just because an aggregate is not shown does not mean that an aggregate doesn't apply. The applicable limits are:

Liability and Medical Expenses Limit: is the most paid for a single bodily injury, property damage, or medical event on a single personal and advertising offense. 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.

Medical Expense Limit: is a sublimit within the liability and medical expenses limit that caps medical expense payments to any one person. Medical expenses coverage applies to medical expenses of individuals injured on your premises or due to your operations, without regard to fault.

Damage to Premises Rented to You Limit: is the most that is paid for fire or explosion to any premises rented or temporarily occupied by the insured. This is NOT a sublimit and is NOT subject to the general aggregate.

General Aggregate: is not listed on the declarations. It is twice the liability and medical expenses per-occurrence limit. This does not apply to the products-completed operations hazard.

Products-Completed Operations Hazard Aggregate: is not listed on the declarations. It is twice the liability and medical expenses per-occurrence limit.

Business Liability Exclusions

The business liability exclusions are very similar to the commercial general liability form.

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.

A number of endorsements are available to tailor the BOP to meet the needs of the individual insured. These endorsements are much more limited than those available under the commercial property and commercial general liability coverage parts. However, the following types of endorsements and more are available for some customizing:

Property

• Spoilage
• Food contamination
• Ordinance or law
• Functional valuation
• Earthquake
• Condominium endorsements
• Windstorm/hail percentage deductible endorsement

Liability

• Various additional insureds
• Hired and non-owned auto liability
• Liquor liability coverage
• Employee benefits
• Professional liability for specific professionals such as: funeral directors, owners of hearing aid stores, opticians, beauticians, barbers, printers, pharmacists, and small-animal veterinarians.

A Business Owners Policy (BOP) is an insurance package designed for small and medium-sized businesses that combines property, liability, and business interruption coverage. Here are some examples of claims that can be covered by a BOP:

• Property damage: A BOP can cover damages to your business property, such as a fire or vandalism, or damage caused by a natural disaster like a hurricane or earthquake.
• Liability claims: A BOP can help cover legal costs and damages associated with a third-party injury or property damage that occurs on your business premises. For example, if a customer slips and falls in your store, a BOP can help pay for their medical expenses and any legal fees associated with the incident.
• Product liability: If your business sells products that cause harm to a customer, a BOP can help cover the costs associated with a lawsuit. For example, if a product you sell causes an allergic reaction or injury to a customer, a BOP can help pay for any damages awarded in a lawsuit.
• Business interruption: If your business is unable to operate due to a covered event, such as a fire or natural disaster, a BOP can help cover lost income and expenses during the interruption.
• Employee theft: If an employee steals from your business, a BOP can help cover the financial losses incurred.

In terms of lawsuits, here's an example of how a BOP can help: Let's say a customer slips and falls in your store and sues your business for medical expenses and damages. If you have a BOP, your insurance provider can help cover the cost of defending your business in court and any damages awarded to the customer, up to the policy limit.

Without insurance, you would be responsible for paying these costs out of pocket, which could be financially devastating for a small business.