Business Owner’s Policy (BOP): What It Covers, How to Get It

A business owner’s policy bundles three important types of business insurance — general liability insurance, commercial property insurance and business interruption insurance — into one policy. BOPs are designed for businesses with fewer than 100 employees or less than $5 million in annual revenue, though not all companies are eligible.

If your business has an office or storefront or sells physical products, a business owner's policy may be a good fit. It may not be the only insurance policy you need, though — you'll need to buy commercial auto insurance and workers’ compensation insurance separately if you have vehicles or employees.

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What is a business owner’s policy?

A business owner’s policy is an insurance package that combines several different property and liability protections into a single policy for small-business owners.

A BOP typically includes three types of insurance:

• General liability insurance.

• Business property insurance.

• Business interruption insurance.

Who should buy a business owner's policy?

Any business that has assets, such as equipment or inventory, could benefit from having a BOP. A BOP also is important for anyone who has a brick-and-mortar business location.

Business owner's policies are typically available to businesses that have less than $5 million in annual revenue and fewer than 100 employees. In general, businesses in the following industries are eligible for BOPs:

• Retail.

• Restaurants.

• Contractors.

• Grocery stores and convenience stores.

• Landlords of apartment buildings.

• Condo associations.

• Wholesalers.

• Warehouses.

In general, businesses in the following industries are not eligible for BOPs because of the additional risks they face:

• Manufacturers.

• Car dealerships.

• Bars and pubs.

• Banks and financial institutions.

• Auto repair shops.

• Amusement parks.

If you’re unsure about whether your business qualifies for a BOP, contact an insurance broker, who can help you understand what types of business insurance you need. You can also get quotes from insurance companies directly to see what coverage they offer.

What does a business owner’s policy cover?

A business owner’s policy covers the costs of defending your business against certain lawsuits, repairing or replacing damaged property, covering medical bills for injured customers and more.

BOPs provide these protections by including the following types of insurance, which most insurance companies offer in their business owner's policies:

General liability insurance

General liability insurance is the first line of defense for a small-business owner and is always included in a business owner's policy. General liability insurance covers the cost of defending against lawsuits alleging bodily injury, property damage or personal injury. It can also pay out to cover medical claims.

Anyone who owns a small business should have general liability insurance, or they take the risk of a lawsuit eating into their bottom line. You might even have to show proof of liability insurance when signing a contract or getting a small-business loan.

Commercial property insurance

The other main coverage in a business owner's policy is business property insurance. Commercial property insurance can protect the building that your business is housed in and your equipment or inventory. If your property is vandalized, stolen, lost, accidentally broken or damaged by weather, commercial property insurance will pay for the property’s repair or replacement.

Any business that owns or leases commercial space should have commercial property insurance. Most landlords expect their tenants to have their own commercial property insurance. You should also have this coverage if you manufacture products, maintain inventory or keep equipment.

Business interruption insurance

Most insurance companies also include business interruption insurance in their business owner's policies. Business interruption insurance covers lost income when your business has to temporarily slow down or stop operations after vandalism, theft or a covered disaster.

Business interruption insurance is a good idea for every business that has recurring expenses like payroll. If your business can’t generate revenue for a while, business interruption insurance will help you continue to meet your obligations.

What does a business owner's policy not cover?

The following types of insurance are not part of a standard business owner's policy:

• Workers' compensation: Workers' compensation insurance, legally required for most employers, covers injuries or illnesses that employees experience in the scope of their work.

• Professional liability: Professional liability insurance protects service businesses and professionals against claims of negligence.

• Commercial auto policy: Commercial auto insurance insures you against accidents that happen while you’re driving for business purposes.

• Flood and earthquake insurance: Small businesses typically must buy separate, specialized policies to cover flood damage and earthquake damage.

• Employment practices liability: Employment practices liability insurance, or EPLI, guards your business against claims of discrimination, such as gender or race-based discrimination.

How much does a business owner’s policy cost?

The median cost of a business owner's policy is $53 per month or $636 per year, according to insurance marketplace Insureon.

But how much you’ll pay for a BOP can vary depending on a variety of factors, including:

• Coverage limits: The coverage limits on your BOP directly impact the cost. Many small businesses purchase a $1 million/$2 million BOP. This means the insurer will provide $1 million in coverage per claim and $2 million aggregate over the lifetime of the policy (usually one year). However, BOPs are available with limits as low as $300,000/$600,000 and as high as $2 million/$4 million, and higher limits may be available depending on your insurance company.

• Industry: Higher-risk industries with more exposure will pay a higher premium than lower-risk industries.

• Value and type of property: For the commercial property insurance portion of your BOP, the cost depends on the type and value of the property you’re insuring. The higher the property value and the more difficult the property is to replace, the higher the cost.

• Business location and age: The geographic location of your business and your time in business will also affect cost. Newer businesses generally pay higher premiums.

• Size of business: The more employees you have, the more risk exposure you have and the more you’re likely to pay for a BOP.

• Claims history: Insurers pay careful attention to your claims history when quoting you a premium.

Adding optional coverages will increase the cost of your business owner's policy.

Where can you purchase a BOP?

If you already have general liability insurance, property insurance or another type of coverage from a specific insurer, it’s a good idea to ask them if they offer a business owner's policy. You may then be able to get cheaper business insurance by opting for the insurance bundle.

Dozens of companies sell business owner's policies. NerdWallet recommends getting multiple business insurance quotes to find the right fit for your business. Consider starting your search with the following:

Chubb

Chubb had the largest share of the commercial insurance market in 2021, according to the Insurance Information Institute^[0]

Who it’s a good fit for: Business owners who want to buy insurance online from a big, well-established insurance company. Read NerdWallet's review of Chubb business insurance.

Hiscox

Hiscox offers business owner's policies in 43 states and Washington, D.C. You can fill out a short questionnaire about your business’s insurance needs, and then you'll be able to get a quote and decide whether to purchase the policy.

Who it’s a good fit for: Shoppers who need other types of business insurance, like cybersecurity insurance, in addition to a BOP. Hiscox offers discounts of up to 5% if you purchase two or more Hiscox policies. Read NerdWallet's review of Hiscox business insurance.

State Farm

State Farm sells insurance policies through a nationwide network of insurance agents. You’ll need to connect with an agent before you can get a quote and purchase a policy, but talking to an agent can be helpful if you want to understand the nuances of your coverage.

Who it’s a good fit for: Shoppers who also need professional liability insurance. State Farm offers the option for some policyholders to tack this coverage onto a BOP, which could make it a good choice for professional services businesses. Read NerdWallet’s review of State Farm business insurance.

Next

Next is a commercial insurance startup that sells all of its policies online. You can buy a BOP as well as other common types of coverage, like workers’ comp and professional liability insurance, from Next. Next customers can access and share their certificates of insurance digitally.

Who it’s a good fit for: Shoppers who want an all-digital experience and don’t need highly specialized types of coverage, like directors and officers insurance. Read NerdWallet’s review of Next business insurance.

The Hartford

Like State Farm, The Hartford offers professional liability insurance as an optional coverage with its BOP. Policyholders can also tack on cyber liability insurance, which can help pay for expenses like credit monitoring services and notifying affected customers after a data breach.

Who it’s a good fit for: Business owners who want to work with an independent insurance agent. Though it’s possible to get a quote online and buy a policy through a representative of The Hartford, the company also works with insurance agents nationwide. Read NerdWallet's review of The Hartford business insurance.

Progressive

Progressive sells BOPs and other business insurance policies, but they may be underwritten by different insurance companies, not Progressive. This insurer is best known for commercial auto insurance, for which it had the largest share of the market in 2021, according to the Insurance Information Institute^[0]

Who it’s a good fit for: Shoppers whose primary concern is commercial auto insurance. Read NerdWallet's review of Progressive business insurance.