Is a Business Owner’s Policy (BOP insurance) right for your small business?

Learn when BOP insurance is the right coverage — and when it’s not.

Matt Crawford
By Matt Crawford
Published Oct 11, 2023
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Small business owners may hear about a business owner’s policy, also called BOP insurance, but it isn’t always the right coverage for every small business.

To BOP or not depends on the specific needs of your business and the types of risk you and your businesses need protection against.

Jump ahead to learn:

What is BOP insurance?

BOP insurance, also called a business owner’s policy, combines two important types of business insurance: general liability insurance and commercial property insurance. Typically, insurers bundle these two types of coverage together in a package that’s less expensive than buying separately.

General liability insurance

General liability covers injuries for which you are liable. When the injury is physical it’s called bodily injury. Or the injury could be perceived, such as slander or defamation (known as advertising injury).

For example, it helps pay for medical expenses if your business is held responsible if a customer slips and falls at your business.

General liability insurance also helps cover property damage costs — when you or an employee accidentally damage someone’s property. For instance, say you own a cleaning business. You accidentally knock into a crystal vase while vacuuming. Your client insists you pay for a replacement, which insurance can help you with.

Commercial property insurance

Commercial property coverage helps pay for your business goods, gear, equipment and inventory if something happens, like a theft or a fire.

Business property insurance also can help pay for repairs, construction and expenses if the structure where you do business gets damaged. (If you own that space, that is.) So if a tree crashes through your building’s roof after a big storm, you would have help paying for the repair.

Commercial property coverage also includes business income interruptions. This policy aspect can help compensate you for when business operations pause due to a covered loss.

For instance, say a fire damages the building where you run your business. If you can’t work until that space is repaired, insurance can either provide alternative space or monetary compensation for financial losses.

What isn’t covered under a BOP insurance policy?

While BOPs have wide coverage options, some things aren’t covered that you may need for your business.

For example, you won’t find professional liability coverage in most BOP plans, although NEXT does include it for some types of businesses. This is essential coverage for malpractice or other mistakes made in professional services.

You also won’t find workers’ compensation insurance included in BOP coverage. Most states require this coverage if you have an employee.

Whether you have a single work van or a small fleet of delivery vehicles, your commercial auto insurance can provide coverage, but it’s not included in the BOP. However, you can sometimes purchase auto coverage at a discount if you buy both auto and BOP policies from the same company.

Depending on the insurance company, you may be able to add additional coverages to your BOP based on your business needs. These include liability for crime and employment practices (in case of discrimination, wrongful termination, or other charges related to your employment practices). You also may want coverage for things like electronic data or valuable papers that may be excluded from coverage.

BOP insurance pros and cons

Bundling multiple coverages under one policy (in the case of a BOP, general liability and commercial property) and one company allows for a single point of contact — and may lead to a lower price than purchasing separately.

At the same time, BOPs aren’t necessarily as flexible as they could be. So if you don’t need that property coverage, you may end up paying for insurance that you won’t use.

When seeking business insurance coverage, list the coverage your business needs, and decide whether a BOP fulfills those requirements. Look for an insurer who can create tailored coverage.

Is BOP insurance the best choice for your small business?

While the business owner’s policy covers general liability — which most businesses can benefit from — you may not need property coverage. It all depends on the specific characteristics of your business and the types of risk you and your business face.

Take a restaurant. The owner needs general liability coverage in case someone gets sick or injured due to restaurant operations or food. They also need coverage for their physical space and inventory in case of an unexpected closure due to a fire, for example, or their cooking equipment gets damaged or stolen. They’ll also want business interruption coverage for if/when that happens. If the restaurant has employees, workers’ compensation insurance is also needed.

In contrast, a personal trainer or fitness instructor isn’t going to need that same coverage. For example, a trainer will want general liability insurance in case of injury and professional liability insurance in case there’s a business disagreement. However, they might not need property insurance if they don’t have equipment or a physical space they own or rent.

Generally speaking, a BOP might be right for you if:

  • You have a physical location for your business.
  • You have equipment or inventory that could get stolen or damaged.
  • You or your employees interact with customers and the public.

How NEXT helps small business owners get customized BOP insurance

NEXT works exclusively with small business owners. We can help you find the right business insurance — BOP or not — for your needs.

You can purchase a business owner’s policy online in less than 10 minutes. We’ll ask you a few questions about your business and create a customized, adjustable insurance quote. Coverage begins right after payment, and you can access your certificate of insurance immediately.

If you have questions, our licensed, U.S.-based insurance advisors are ready to help.

Start a free instant quote with NEXT.

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Matt Crawford
About the author

Matt Crawford leads NEXT's content team. He's a small business insurance specialist and has worked with business owners throughout his career as a community journalist and content marketer.

You can find him at one of his many favorite local restaurants in the San Francisco Bay Area when he's not at work.

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