A Business Owners Policy (BOP) combines different coverages into a neat package to meet most insurance needs of a typical small-to-medium size business.
A BOP usually contains coverage for:
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Property (Buildings, Business Personal Property, Business Income, and Extra Expense)
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General Liability
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Non-Owned and Hired Auto Liability
Depending on the carrier and their particular BOP, the policy can also contain endorsements covering Small Computer, Crime (Monies and Securities, and Employee Dishonesty), and Fine Arts. Keep in mind that coverage enhancements vary widely by carrier.
The goals of the BOP are to provide a broad range of appeal for the average business owner with limited coverage restrictions and to offer additional options for special exposures.
Property Coverage
The Property portion of a BOP can include the following coverages:
- Your interest in your buildings and your business personal property (BPP), including furniture, fixtures, machinery, equipment, inventory, and tenant improvements and betterments
- Limited amount of BPP while in transit or temporarily away from your premises, as well as limited coverage for personal property of others while in your care
- Exterior building glass if you are the building owner
- Business income and extra expense coverage, typically on an actual loss sustained basis, when no limit is designated. Business Income coverage protects you in the event that a covered loss causes you to shut down your business, and reimburses you for lost profits and continuing expenses, such as payroll and rent. Extra Expense covers expenses you incur to avoid or minimize the suspension of your business, such as temporary relocation costs or the costs to repair or replace property or restore lost information, to the extent that it reduces the amount of the loss you would have had otherwise.
General Liability Coverage
The General Liability portion of a BOP provides both legal defense and awards or settlements paid if your business suffers a lawsuit arising from:
- Accidents on your premises that cause bodily injury to others, for which you are legally responsible (liable). For example, if someone slips and falls in your store due to water spilled while your employee cleaned the floor, the incident falls under the policy limit for Premises and Operations as bodily injury.
- Accidents on your premises that are not necessarily your fault. For example, if an elderly shopper steps off your well-maintained curb and breaks her ankle, the incident falls under a sublimit of Premises and Operations known as Medical Payments.
- Accidents that cause property damage to the property of others. For example, if a lawn mower cutting the grass on your premises throws out a rock, damaging a customer’s windshield, the incident falls under the policy limit for Premises and Operations as property damage.
- Products or completed operations that cause bodily injury or property damage. Examples include doughnuts made and sold in your business that result in food poisoning, or improperly-processed ink on your printed material that rubs off on a customer’s upholstery.
- Personal injury such as invasion of privacy, libel, slander, wrongful eviction, false arrest, and advertising injury, such as copyright infringement or false advertising.
Non-Owned and Hired Auto Liability Coverage
Non-Owned and Hired Auto Liability coverage provides for vehicles that:
- Your employees use in the course of their job duties
- You rent or borrow, even if your company does not own any vehicles
If your business does own vehicles, this coverage must be provided under a separate Automobile policy.
Who is an Insured?
Depending on how your business is set up (for example, as a sole proprietorship, a corporation, a partnership), the individuals who are actually covered by the policy will differ.
- If you operate as a sole proprietor, then the BOP (or other General Liability policy) protects both you and your spouse as respects all of your business dealings.
- If you are incorporated, then all the officers of the corporation (no spouses) are covered as respects business actions.
- If you are a partnership, all of the partners and their spouses are covered in their business actions.
For all types of businesses, your employees are considered insureds while acting in the course and scope of their jobs.