Business Owners Policy
by William F. Schaake, CIC, CRM, CLCS
A Business Owners Policy or BOP combines General Liability insurance and Property insurance in a single commercial insurance policy. For many growing businesses BOP’s offer small business insurance coverage at very competitive premiums.
Business Owners Policies include:
- Property insurance for buildings and contents owned by the company — there are essentially two different forms, standard (basic) and special. Special provides more comprehensive coverage than standard or basic. The policy may also cover loss of business income and extra expense resulting from an insured peril. A BOP generally insures lost or damaged property for replacement value, which means the settlement amount is ordinarily adequate to replace the property without deducting for depreciation. The Property insurance portion of a BOP can also cover personal property of others of which business is legally liable for the damages.
- Loss of Business income, formerly known as business interruption insurance covers the loss of income resulting from a fire or other catastrophe that disrupt the operation of the business. It can also include the extra expense of operating out of a temporary location. It generally covers continued operating expenses and net income before taxes
- The liability coverage protects the insured’s legal responsibility for bodily injury or property damage to an injured third party. It may also protect against claims resulting from damage to the persona, such as libel, slander, wrongful eviction, copyright, and trademark infringement.
- Property insurance for buildings and contents owned by the company — there are essentially two different forms, standard (basic) and special. Special provides more comprehensive coverage than standard or basic. The policy may also cover loss of business income and extra expense resulting from an insured peril. A BOP generally insures lost or damaged property for replacement value, which means the settlement amount is ordinarily adequate to replace the property without deducting for depreciation. The Property insurance portion of a BOP can also cover personal property of others of which business is legally liable for the damages.
- Loss of Business income, formerly known as business interruption insurance covers the loss of income resulting from a fire or other catastrophe that disrupt the operation of the business. It can also include the extra expense of operating out of a temporary location. It generally covers continued operating expenses and net income before taxes
- The liability coverage protects the insured’s legal responsibility for bodily injury or property damage to an injured third party. It may also protect against claims resulting from damage to the persona, such as libel, slander, wrongful eviction, copyright, and trademark infringement.
It can also provide liquor liability if the insured’s business is not engaged in manufacturing, distributing, selling, serving, or furnishing alcoholic beverages. For example, if a company distributes alcohol at a company picnic or office party, the exposure of someone becoming intoxicated and causing potential harm to another is generally covered by host liquor liability.
General Liability coverage can also extend to liability assumed by entering into a variety of different types of contracts, such as a lease agreement or elevator maintenance agreement. Hired and non-owned auto as well as garage keepers and garage liability coverages sometimes may be added by endorsement.
Business Owners Policies generally do not include professional liability, auto insurance, worker’s compensation, and health and disability coverage, but may include Employer Practices Liability or EPLI and Professional Liability often covered separately by Errors & Omissions or E & O coverage. This would be dependent on the industry and carrier.