Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Oct 20, 2021

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A “Business Owner’s Policy,” also referred to as a “BOP,” is a package commercial insurance policy designed to meet the needs of small businesses.

A qualified insured may include any business that sells retail items, apartment buildings, and convenience stores, to name but a few.

Does a business owner’s policy combine all property and liability coverage?

As mentioned above, your BOP will combine the necessary property and liability coverage to meet the unique needs of your small business, all while behaving similarly to a personal insurance policy with regard to billing and renewal procedures.

This means you can be billed monthly to your place of business and have the policy renewed without dealing with the standard commercial insurance protocol, such as having someone inspect the property and the like.

The liability insurance portion of a BOP is basically a Commercial General Liability policy.

It may cover your premises and operationsproducts and completed operationspersonal and advertising injury, and medical payments to others.

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What’s included in a business owners policy?

A business owners policy combines business property and business liability insurance into one business insurance policy. BOP covers your business from claims resulting from disasters such as fire theft or other covered incidents. It also covers claims resulting from your business operations (bodily injury and property damage liability). Businesses can add optional coverages like data breach, business income for off-premises utility services and other specialized services.

The property coverage in a business owners insurance policy can be extensive. The best aspect of business owners insurance coverage is that your property, including the building and the contents, is covered as All-risk, meaning you are insured against a number of perils, unless specifically excluded in the policy.

Additionally, loss of business income and extra expense coverage is automatically included in a BOP. This coverage would be necessary in the event you suffered a covered cause of loss.

A BOP will reimburse you financially until your operations are up and running again, including the extra expenses associated with getting you there.

For example, if your building burnt down and you needed to open at another location, you’d be compensated for the loss of income and the expense of operating at the other location.

These are considered indirect or time element losses.

Finally, there are also automatic extensions of coverage for things such as outdoor signs, data recovery, plants, trees, shrubs and valuable papers or records that may be destroyed by a covered loss.

You will also be covered for the business property at a newly acquired location for a specified amount and period of time as well as inflation guard coverage, which automatically increases the amount of insurance coverage by a specified amount each year.

This is done to ensure you do not have inadequate coverage as time goes on.

Remember, your policy may renew without any sort of inspection in some cases, which could potentially lead to being underinsured if your business expands and coverage didn’t automatically increase.

It is important to note that certain types of coverage, such as vandalism and theft, are suspended in the event your property becomes vacant.

The standard deductible on a BOP is $500, but may be increased if you so desire. A higher deductible may help you achieve a lower overall premium.

If you rent or own a workspace, you will likely need a business owners policy (BOP). This policy can help your business if you have a physical location to cover your business and assets. It can cover businesses run out of homes, rented or owned offices, stores and garages. You should get this coverage if there’s a possibility of getting sued. For example, if a client falls in your workplace, to pay for his/her medical expenses.

Moreover, a business owners insurance is a good idea if you have assets that could get stolen or damaged (digital assets, customer data, equipment, furniture, cash or inventory).