Business Owner's Policy (BOP): A Plain-English Guide
What a business owner's policy bundles together, which businesses usually qualify, what it leaves out, and how to decide if a BOP fits your business.
A business owner's policy, usually called a BOP, is one of the most common ways small businesses buy insurance. Instead of buying several separate policies, you get a package that bundles the core coverages most small businesses need. Insurers design BOPs to be straightforward to buy, and they're often priced more attractively than the same coverages purchased individually.
Here's what a BOP is, what it typically includes, and the gaps you still need to think about.
What a BOP usually includes
General liability
This protects you against third-party claims of bodily injury, property damage, and personal and advertising injury. It's the same type of coverage described in our general liability guide.
Commercial property
This covers physical property your business owns or is responsible for, such as your building (if you own it), furniture, equipment, inventory and supplies, against covered causes of loss like fire, theft or certain weather damage. Whether a cause of loss is covered depends on the policy form; floods and earthquakes, for example, are commonly excluded and may need separate coverage.
Business income (business interruption)
If covered property damage forces you to close or slow down temporarily, business income coverage can help replace lost income and pay certain ongoing expenses for a period of time. For a business that depends on a physical location, this can be the difference between reopening and closing for good.
Common add-ons
Many insurers let you customize a BOP with endorsements. Common options include:
- Equipment breakdown for mechanical or electrical failure of things like refrigeration or HVAC.
- Data breach or cyber coverage for limited cyber incidents.
- Hired and non-owned auto liability if employees use personal or rented vehicles for errands.
- Spoilage for food or temperature-sensitive goods.
- Professional liability for certain service businesses, offered by some insurers.
What a BOP does not cover
- Workers' compensation. Employee injuries need a separate workers' comp policy.
- Business vehicles. Autos owned by your business need commercial auto insurance.
- Professional errors. Unless added, mistakes in your services or advice need professional liability.
- Health and disability insurance for you or your staff.
- Excluded perils such as flood and earthquake in many policies.
Which businesses qualify for a BOP?
Insurers typically offer BOPs to small and mid-sized businesses with relatively predictable risks. Eligibility rules vary, but insurers commonly look at:
| Factor | Why it matters |
|---|---|
| Type of business | Offices, retail shops, small restaurants and many service businesses often qualify; higher-risk operations may not. |
| Size | Revenue, building size and number of employees may need to fall under the insurer's thresholds. |
| Location | Exposure to severe weather or crime can affect eligibility and price. |
| Claims history | Frequent past claims can make a business ineligible or more expensive. |
Higher-risk trades, such as some construction work, may be steered toward separate general liability and property policies instead.
BOP vs. buying policies separately
A BOP is convenient and often cost-effective, but it isn't automatically the best choice. Separate policies can offer higher limits, broader coverage or specialized terms that a packaged policy doesn't. If your business has unusual property, significant equipment, or contracts with specific insurance requirements, compare both approaches.
How to decide if a BOP is right for you
- List what you own: equipment, inventory, furniture, tools and any building.
- Estimate how long you could survive financially if your location were shut down after a fire.
- Check your lease and client contracts for required coverages and limits.
- Ask an agent whether your business type qualifies and which add-ons are relevant to you.
- Compare the property limits to the actual replacement cost of what you own.
Frequently asked questions
What does a business owner's policy typically include?
Most BOPs combine general liability, commercial property coverage for your building or business contents, and business income (business interruption) coverage. Some insurers add other coverages or offer them as endorsements.
Can a home-based business get a BOP?
Often yes, depending on the insurer and the type of work. Homeowners policies usually provide very limited coverage for business property and business liability, so a home-based business may need separate coverage.
Does a BOP cover my employees' injuries?
No. Work injuries to employees are generally covered by workers' compensation, which is bought separately.