Introduction to BOP
A business owner policy also known as BOP is an insurance policy that combines protection from all major property and liability risks in one package. A BOP is an insurance package policy that is designed for small to medium-size businesses to protect them from various losses. Business owner policies usually include the same kind and same degree of risks that are generally faced by a number of businesses.
A BOP reduces the amount of premium as it allows a business to receive multiple types of coverage at a lower rate than if the policies are purchased individually for each risk. In this blog, we will discuss the coverages and some other factors of a business owner policy.
A business owner policy is a pre-packed insurance policy that covers various risks simultaneously to protect a business. The coverages of BOP may vary according to business and the insurance companies. But all kinds of BOP covers some primary coverage policies. These primary coverage policies are the following:
Commercial property insurance: This policy covers the damages to the building, equipment, and inventory of a business.
General liability insurance: It helps to cover any medical expenses and bodily injury and also property damages for which a business or the employees of the business are legally responsible for.
Business income: Also known as business interruption insurance, it helps a business to pay bills and employees if a business has to temporarily close in case of fire, tsunami, or other kinds of disasters that are covered in the policy.
Crime insurance: A crime insurance policy covers the losses to a business in case of theft, forgery, and other kinds of business frauds.
Here are some additional coverages that may be included:
Accounts receivable: This policy protects a business against losses from unpaid invoices.
Cyber liability: It is a policy that covers losses due to cyber-attacks(digital frauds) and damages to computer systems or electronic data.
Equipment breakdown: This policy covers the damages or complete losses of equipment, including computers and other devices in a business.
Personal and advertising injury: Copyright infringement, libel, and slander losses of businesses are covered under this policy.
Rented vehicles: This coverage policy includes the damages of vehicles you lease, hire or borrow.
Employment Practices Liability: It covers the expenses of the business that occur due to conflicts with employees over termination, discrimination, and other losses arising from the employment process.
Coverages not included
Business insurance policies do NOT cover every type of risk. There are some insurance policies that a business owner has to buy other than a BOP. Some of these coverages that are not included in BOPs are the following:
- Professional liability
- Auto insurance
- Workers’ compensation
- Employers liability insurance
Advantages and Disadvantages of a BOP
The standard business owner policy consists of a declaration page that offers two key advantages to small businesses: coverage and price. A BOP provides broad coverage to a business for a relatively low premium than the total cost of the individual coverages. The business income coverage automatically includes under a standard BOP that is generally not covered in a commercial property policy. The liability section of BPO provides the same types of coverages as the standard commercial general liability form (CGL).
However, a BOP has some disadvantages—it can only cover a few types of risks, therefore is only available for certain types of smaller businesses. BOP offers a set of policies that cannot be changed. It isn’t as flexible as a standard commercial package policy.
Eligibility for a BOP
All kinds of businesses are not qualified for the business owner’s policies. Eligibility requirements may vary among insurers. Insurance providers may have conditions regarding the business location, the size of the business, and the class of the business.
For instance, most insurance providers allow business buildings under BOP that are smaller than six stories or 100,000 square feet. They may also have limitations if primary business property is not present in a specified area.
Typically, business classes that are eligible for BOPs include retail stores, apartment buildings, small restaurants, and other office-based businesses that fulfill the eligibility requirements of the insurer.