Business Owner’s Policy Insurance: Cost, Coverage & Providers
Nancy Fernandez is a Credit Card and Insurance Expert at Fit Small Business, specializing in business credit cards and business insurance.
A business owner’s policy (BOP) packages general liability and commercial property into a single policy that covers businesses’ most common risks. It’s often more convenient and more affordable to buy a BOP than to purchase these policies separately. On average, BOP insurance ranges from $500 to $4,900, depending on the chosen coverage and the business’s industry.
The Hartford has been helping small business owners find the right coverage for more than 30 years. Its agents will work with you to get the right policy for your individual needs. Get a free, no-obligation quote online in minutes.
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BOP Insurance Costs
Affordability is the primary reason small business owners should consider buying BOP insurance. A business owner’s policy typically costs between $500 and $4,900 per year. However, the two coverages most commonly included in BOP insurance, general liability and commercial property, could total $500 and above easily if purchased separately. Individual costs for both general liability and commercial property will depend on the industry the business falls under and its coverages.
Business Owner’s Policy Costs by Industry
Industry (Profession) | Coverage Limits | Annual Premium Ranges |
|---|---|---|
Construction & Contracting (Handyman) | $1 million occurrence—$2 million aggregate | $500 to $4,300 |
Architects (Landscape Architectural) | $1 million occurrence—$2 million aggregate | $500 to $3,900 |
Cleaning (Janitorial & Cleaning―Residential) | $1 million occurrence—$2 million aggregate | $630 to $4,900 |
Personal Care (Beauty Salons) | $1 million occurrence—$2 million aggregate | $630 to $3,000 |
Nonprofessional Services (Photographers) | $1 million occurrence—$2 million aggregate | $500 to $2,900 |
Financial Services (Accounting Services) | $1 million occurrence—$2 million aggregate | $500 to $1,900 |
Business Consultants (Management Consulting) | $1 million occurrence—$2 million aggregate | $500 to $2,000 |
Health Care (General Physicians) | $1 million occurrence—$2 million aggregate | $630 to $2,100 |
Your industry has a major impact on how much your business owner’s policy costs. Certain industries, including construction or retail, have a higher risk for both property and liability claims. Meanwhile, business consultants don’t have many property exposures but may face more liability lawsuits.
Insurers also consider other details when calculating BOP insurance costs, including:
- Claims history: Insurers need to protect their bottom line, so most charge business owners who have filed multiple claims.
- Number of employees: Employee injuries aren’t covered in BOP insurance; however, the more staff you have, the greater risk you face of theft and liability lawsuits.
- Property value: The actual value of any business-owned property can help you determine the appropriate limits. Most policies also require co-insurance, which is the percentage of the value of your property you’re required to insure.
- Policy terms: Requesting higher coverage limits causes your premiums to go up. Conversely, you can ask for a higher deductible to lower your costs, but you only want to do that if you can afford to pay that amount out of pocket.
What BOP Insurance Is
BOP insurance is a bundle of insurance policies that includes general liability, commercial property, and usually, business interruption coverage. The main advantages of BOP insurance for small business owners are that it provides necessary protection, often costs less than purchasing separate policies, and reduces the number of policies for business owners to keep track of.
Not all businesses qualify for BOP insurance. Every insurer has different rules, but BOPs are generally reserved for businesses in low-risk industries with fewer than 100 employees, less than $1 million in revenue, and small commercial spaces―whether they own or rent.
Did you know?
There is a difference between a commercial package policy and a BOP policy. A BOP is an insurance bundle that’s best for small, “Main Street” business owners as the underwriting guidelines are fairly strict and limited to providing coverage to businesses with a lower amount of revenue and square footage. However, a commercial package policy bundles coverages designed for larger companies.
Business Owner’s Policy for Home-based Business
Most homeowners’ insurance excludes business activities and exposures. In this case, you may want to consider getting a BOP to cover your business liability and property. However, some home insurance providers offer business riders. It’s best to review your policy options with your agent before deciding whether you need a home-based business insurance policy.
What BOP Insurance Covers
BOP insurance combines general liability and commercial property coverage as these policies cover some of the most common perils business owners face. General liability pays for property damage and physical injury the policyholder causes other people, while commercial property pays for damage to the policyholder’s property.
Most small business insurers also add business interruption insurance to the property coverage in a business owner’s policy. Also called business income insurance, this coverage pays for lost income and ongoing expenses when perils covered in the property portion stop the business from operating.
Did You Know?
Aside from packaging both general liability and commercial property at a lesser cost, business owners can customize their BOP to include additional coverages if they desire. Another advantage of getting a BOP is that it comes with “actual loss sustained” coverage that protects against a loss of business income.
General Liability in BOP Insurance
The general liability coverage in BOP insurance protects your business by paying costs associated with third-party property damage, bodily harm, and advertising injuries like defamation and copyright infringement. These costs might include the injured party’s medical and repair bills or your legal fees if they sue.
Situations that might trigger the liability portion of a business owner’s policy include:
- A fire in your store that causes smoke damage in a neighboring business
- A customer’s slip-and-fall that causes physical injury
- A graphic designer’s allegation that you used their work without permission
Liability claims may be your greatest financial risk if you work with the public, so getting general liability coverage is essential for your business.
Commercial Property in BOP Insurance
A business owner’s policy also includes commercial property coverage to pay for damage to your business’s physical assets. These assets typically include business-owned buildings, equipment, fixtures, furniture, and inventory.
You can choose to insure your business property either at its actual value or its replacement cost value. Opting for the actual value insures items at their market value, which means your insurer pays the replacement cost minus depreciation. This option usually has a lower premium than insuring for the replacement cost.
Business Interruption Insurance in BOP Insurance
Business interruption insurance covers lost income and ongoing expenses when a covered claim forces you to suspend business operations. Insurers typically only cover these costs for 12 consecutive months, but 18-month and two-year business interruption coverage is becoming more common.
The business interruption coverage in your BOP insurance might pay for:
- Lost revenue
- Employees’ wages
- Rent
- Utilities
- Relocation expenses
Business interruption insurance can help your business survive if a fire or a burst pipe forces you to shut down for even a brief period.
Other Coverages That May Be Included in BOP Insurance
BOP insurance is relatively standardized throughout the insurance industry, which means it typically includes general liability and commercial property coverage no matter which insurer offers it. However, other coverages can be added to a business owner’s policy. Coverages that aren’t part of the standard package are called endorsements or riders.
Examples of coverage insurers sometimes offer as a rider to their BOP insurance include:
- Cyber liability insurance: Covers costs associated with a data breach or cyberattack
- Professional liability insurance: Covers legal fees when clients claim they suffered financial loss due to your negligence, also called errors and omissions (E&O) insurance
- Inland marine insurance: Covers business property in transit
- Spoilage and temperature change: Covers the cost of replacing spoiled perishable inventory after a mechanical malfunction or power outage
- Accounts receivable: Covers financial losses arising if your accounts receivable records are damaged by a covered peril
- Earthquake insurance: Covers damage caused by earthquakes, mudflow, and landslides
- Employee dishonesty: Covers financial loss due to employee theft and other illegal activities
What’s Not Covered in BOP Insurance
A business owner’s policy is a good foundation for most small business owners. However, some situations may call for additional coverages that aren’t included in BOP insurance and aren’t usually offered as a rider or endorsement.
Other policies small business owners might need include:
- Commercial auto insurance: Covers injury, damage, and lawsuits arising from accidents involving business-owned vehicles
- Workers’ compensation insurance: Covers employees’ work-related injuries and illnesses by paying their medical bills and replacement wages
- Business overhead expense (BOE): Covers overhead costs while the business owner is disabled, also known as business expense insurance
Did You Know?
Most small business owners don’t think of getting business overhead expense (BOE) disability insurance policies. A business owner who is a sole proprietor may want to consider getting one because when they can’t work, their business won’t be able to generate any income.
Top BOP Insurance Providers
Most insurance carriers that work with small businesses offer BOP insurance, so many create endorsements or add coverages to either stand out in the crowd or attract businesses in specific industries. This means business owners should look at both price and policy terms to see which BOP gives them the ideal coverage for their operations.
Our list of top providers includes a few large, national carriers that either specialize in or dedicate teams to small business insurance, plus an online broker that can help business owners compare quotes from multiple top-rated insurers.
Top BOP Insurance Providers
Provider | Best For |
|---|---|
Business owners who want to tailor their BOP insurance to their specific risks | |
Professionals who depend on computers and electronic data | |
Business owners who want to compare rates from multiple BOP insurance providers | |
Contractors and construction business owners who want BOP insurance with employee dishonesty coverage | |
Business owners looking for up to 24 months of business interruption coverage |
The Hartford
The Hartford is a large national insurance carrier that does a great job of meeting the insurance needs of small business owners. It offers a BOP policy that includes general liability, commercial property insurance, and business interruption, and it allows business owners to customize with additional coverages based on their unique risks. Depending on your industry, you might choose coverage for data breaches, employee dishonesty, or off-premises property.
Its combination of small business experience and a large list of industry-specific endorsements makes The Hartford the ideal choice for business owners who want to customize their BOP. Moreover, business owners can save 5% when they pay their premium upfront and up to another 10% if they also buy a workers’ compensation or commercial auto policy.
Hiscox
Hiscox is a small business insurance specialist that designs policies to fit a wide range of industries. It’s particularly strong at covering business owners who offer professional services, such as consultants, accountants, and marketers. Hiscox can offer BOP insurance to businesses with up to $3 million in revenue, and pricing starts at just around $41 per month.
Another highlight of Hiscox’s professional services BOP is its coverage for income lost in computer interruptions and recovery of electronic data. It includes up to $10,000 in coverage automatically for these perils, making it ideal for professional service businesses that rely on technology.
Insureon
Insureon is an online brokerage focused on finding insurance for small businesses, freelancers, and independent contractors. As a small business insurance brokerage, Insureon partners with top-rated carriers to give its clients business insurance that fits their specific needs.
These partnerships make Insureon the ideal choice for business owners who want to compare BOP policy offers before they pick an insurer. Most business owners get to choose from multiple quotes when they submit an application with Insureon. Then, they can usually bind their BOP online or talk through their options with a licensed insurance professional.
Travelers
Travelers is a large, well-known, national carrier that can offer insurance to a diverse set of businesses. Its size allows the carrier to create BOP insurance for industries other carriers won’t cover, including artisan contractors and construction businesses.
Not only can Travelers offer coverage to hard-to-insure artisan contractors, but its construction BOP includes up to $25,000 in coverage for employee theft that can be extended to clients’ property. This makes it ideal for contractors who want protection for their business in case a client accuses their employees of illegal acts.
CNA
CNA is one of the nation’s largest property and casualty insurance carriers and has a broad range of insurance policies for small businesses. Its BOP policy offers broad protection by including coverage for identity theft, employee dishonesty, and equipment breakdown.
CNA’s BOP is the best choice for business owners who need business interruption insurance. Where most insurers offer 12 months of coverage, CNA’s BOP can be extended to 24 months, and it doesn’t include a waiting period or payroll limit.
Bottom Line
BOP insurance is a cost-effective and convenient way for small business owners to get the fundamental policies they need to protect their business. Combining general liability and property coverage in a single package lets insurers sell BOPs for less, but it also means business owners only have one policy and one premium to keep track of.
It’s easy to find a business owner’s policy that’s best for your business by contacting The Hartford. Its team of specialists will get to know your business to ensure you get the right policy at the right price. Get a free, no-obligation quote online in minutes.
