A Business Owners Policy (BOP) is a highly sought-after insurance package for small business proprietors as it consolidates crucial coverage into a single, cost-effective plan. However, not every business can qualify. If you’re wondering whether your company is eligible, understanding the typical requirements can help you decide whether to explore a BOP or seek separate policies.
What Is a Business Owner’s Policy?
A Business Owners Policy is a bundled insurance plan that typically includes both general liability insurance and commercial property insurance. This combination protects against some of the most common risks that small businesses face—like customer injuries, property damage, or loss of business equipment—while often offering cost savings compared to buying each policy separately.
Eligibility Factors for a BOP
Insurance providers generally determine BOP eligibility by looking at the business’s risk profile. The lower the likelihood of costly claims, the more likely a business is to qualify. Although every insurance company has its specific policies, numerous small businesses that fulfill the criteria listed below could qualify:
- Fewer than 100 employees
- Annual revenue under $1 million
- Occupies a small office, retail space, or similar commercial property
- Requires less than one year of business interruption coverage
These requirements help insurers balance affordability with adequate coverage for businesses that have a relatively low risk of significant losses.
Industries That Commonly Qualify
Businesses in low-risk industries have a greater chance of BOP approval and often enjoy lower premiums. Examples include:
- Professional services, such as consulting or design work
- Small retail shops
- IT services and tech support
- Bookkeeping or administrative services
- Light manufacturing or assembly
These industries tend to have fewer on-site hazards, lower chances of severe property loss, and reduced liability exposure compared to high-risk operations like construction or large-scale manufacturing.
Why Businesses Choose a BOP
For eligible businesses, a BOP offers both convenience and cost savings. Since general liability and property coverage are bundled together, there’s no need to manage separate policies. Additionally, many landlords or clients require proof of liability insurance, making a BOP a practical way to meet contract or lease requirements.
Core Coverages Included
General Liability Insurance
This coverage protects your business if you are held responsible for third-party bodily injury, property damage, or certain personal and advertising injuries. It can help pay legal fees, settlements, and court judgments, reducing the financial impact of a lawsuit.
Commercial Property Insurance
Commercial property coverage safeguards your business’s physical assets, such as buildings, equipment, inventory, and furniture. This includes protection against risks like fire, theft, or certain weather events.
Business Interruption Coverage
Many BOPs include business interruption insurance, which helps replace lost income if your business cannot operate due to a covered event—like fire damage to your office. However, this coverage typically has time limits, often up to one year, which aligns with BOP eligibility guidelines.
When a BOP May Not Be the Right Fit
If your business has more than 100 employees, generates significantly higher revenue, or operates in a high-risk industry, you may need to purchase separate liability and property policies. This allows for higher coverage limits and specialized protections that a standard BOP cannot provide.
Considering Additional Coverage
Even if you qualify for a BOP, you may still want to add endorsements or separate policies for risks specific to your industry. For example, a company that stores sensitive customer data might add cyber liability insurance. In contrast, a business that relies heavily on vehicles might add commercial auto coverage.
Final Thoughts
A Business Owners Policy can be an excellent investment for qualifying small businesses, offering essential protections at a competitive price. If you meet the typical eligibility requirements and operate in a lower-risk industry, a BOP can help safeguard your company against unexpected losses while simplifying your insurance management.
For more details on how BOPs work and what’s typically included, you can review this Business Owners Policy guide.
