A business owner’s policy, almost always called a BOP, bundles general liability with commercial property cover in a single policy. For a lot of small businesses it is the sensible default, and it is usually cheaper than buying the same two coverages separately. It is not right for everyone, and the reasons why are more interesting than the bundle itself.
Ryan Hearn is a licensed insurance producer in California. This article is educational and is not a recommendation to buy any specific policy. Insightful Coverage is an independent publisher, not an agency, broker or carrier.
What is in the bundle
- General liability — injury to other people and damage to their property, plus legal defence costs.
- Commercial property — your own building, stock, equipment and fittings, whether you own the premises or improve a rented one.
- Business interruption — the one people overlook, and often the most valuable. It replaces income while you cannot trade after a covered loss, and can cover the extra costs of operating from somewhere else.
That third element is worth pausing on. If a fire closes your premises, the property cover rebuilds what burned; business interruption is what keeps paying you while it happens. A business can survive the first loss and fail from the second.
What is not in it
- Workers’ compensation — always separate, and usually legally required once you have employees.
- Professional liability — mistakes in your work are not covered, which matters for anyone selling expertise.
- Commercial auto — vehicles are their own policy.
- Flood and earthquake — excluded from the property portion, as they are on a home policy.
- Cyber and data breach — sometimes available as an endorsement, rarely included by default.
Who is usually eligible, and who is not
Insurers restrict BOPs to businesses they consider straightforward: broadly, smaller operations, in lower-hazard trades, below a revenue and square-footage ceiling that each carrier sets for itself. Shops, offices, small service businesses and many light trades tend to qualify.
Businesses that usually do not: manufacturers with significant hazard, anything involving heavy machinery or high-risk premises, larger firms above the carrier’s thresholds, and most professional practices whose main exposure is advice rather than premises. Those are generally written as a commercial package policy instead, which is the same idea assembled to fit rather than pre-bundled.
The question worth asking before you buy
Ask whether the property cover is written on a replacement cost or an actual cash value basis. Replacement cost pays what it costs to replace the item now; actual cash value deducts depreciation first. On a bundle full of equipment that ages, the difference does not show up in the premium comparison and shows up sharply in the claim.
Related reading
- General liability insurance — half of what a BOP contains.
- Professional liability insurance — the cover a BOP does not include.
- Small business insurance guide — what a new business needs, in order.
- Best business insurance providers — which carriers write BOPs and who they suit.
