What is BOP Insurance?

by Kevin Kerridge

As a small business owner, you know you need insurance coverage like general liability in case someone gets injured in your office and property insurance in case of a fire. But you also know there are many other policies you may need to fill in the gaps left by the major policies. Another concern is the costs of buying a variety of separate business insurance policies. You want good protection but don’t want to spend an arm and a leg to get it.

This is where a business owner’s policy, or BOP comes into play. This type of policy is specifically catered to small to medium sized businesses. Insurance companies realize that by packaging all of a company’s small business insurance into one tidy policy it will save the business owner money and provide for the majority of their insurance needs.

What’s in a BOP?

A BOP provides the insurance a small business needs in one bundle without breaking the bank. In addition, it allows for the purchase of additional coverage beyond what is provided in the main policy, thus providing the business to cater it’s coverage around the nature of the business’s particular risks.

If you are like most small business owners, you are not starting out with a large amount of assets, including a fleet of vehicles or a large amount of machinery. You probably don’t have a large number of employees either. Therefore, a BOP is a prime means of supplying your insurance needs in one package. A BOP typically includes the following:

An advantage of this policy is that it is designed to allow for an expansion of coverage as your business grows and your insurance needs change. Each type of insurance is explored in depth below.

Business Property Insurance

This provides coverage when you lose property from a fire, theft, or vandalism. Assets included in this coverage are computer and office equipment, furniture, physical inventory and supplies, and digital data.

Data loss is covered only in the event the damage was caused to the computer system containing it. Human error or a general software failure is not covered.

General Liability Insurance

Should your business be liable for an injury to a person in your business or damage to property this insurance will cover you. But this protection goes deeper, for your business can be liable for a number of reasons, including:

Errors and omissions insurance covers negligence on your part. If you’re in the business of providing a professional service or offering advice, this insurance is an important part of your portfolio. Data breach covers the compromise of private data from hackers, for example.

Business Interruption Insurance

If you are unable to conduct business because of a fire or natural disaster, you have no way to make money. This is the gap that business interruption insurance fills. For this insurance coverage to come into play there must be physical damage that is covered in your business property insurance.

Workman’s Compensation Insurance

In most states employers are required to carry insurance for employees that suffer work related injuries or illness. Covered injuries can range from tripping over a stack of materials, to carpal tunnel syndrome to exposure to chemicals. Employees are also covered while on business trips, on business errands or while on a service call.

Commercial Auto Insurance

If you provide company vehicles or if your employees use their own vehicles for your business, you need to have commercial auto insurance coverage. Business vehicles are not covered under your business property insurance or your personal auto insurance.

A number of other additional insurance policies can be added depending on your specific needs. Make sure to consult your agent on a periodic basis to see if your coverage remains adequate as your business grows.

The contents of this article and the linked materials do not offer legal, business, or insurance advice related to the needs of any specific individual business. Please consult your attorney, insurance agent or other professional advisor to obtain appropriate legal or other expert advice.

Kevin Kerridge is the Director of small business insurance at Hiscox, a global insurance company with 100+ years of experience.

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