Business owner's policy (BOP): what it covers and who qualifies
A business owner's policy (BOP) bundles three coverages most small businesses need into one policy: general liability, commercial property, and business income (business interruption) coverage. It's usually cheaper than buying them separately, but it's designed for small, lower-risk businesses and doesn't include workers' comp, commercial auto or professional liability.
Published by Marcus L. Barber, former licensed Maryland property and casualty producer (2010–2012)Reviewed by Marcus L. Barber on Updated This guide is general education, not advice for your situation. We're an independent publisher, not an insurer or agent, and we may earn a commission from partner links. How we make money.
Key points
- A BOP combines general liability, property and business interruption coverage.
- It typically fits businesses with up to about 100 employees and around $5 million in revenue, but eligibility varies by insurer.
- It excludes commercial auto, workers' comp, professional liability and health or disability coverage.
- BOP limits are usually lower than stand-alone policies; endorsements can add cyber, EPLI and more.
What a BOP includes
| Part | What it covers |
|---|---|
| General liability | Injuries and property damage your business causes to others, and your legal defense |
| Commercial property | Your building (if you own it), equipment, furniture and inventory after fire, theft, storms and other covered causes |
| Business interruption | Lost income and ongoing expenses like payroll if a covered loss forces you to close temporarily |
The Insurance Information Institute (III) describes a BOP as packaging fire, burglary, liability and business interruption coverage together, with more available through endorsements.
What a BOP excludes
The National Association of Insurance Commissioners (NAIC) lists what you'll need to buy separately:
- Commercial auto
- Workers' compensation
- Professional liability (E&O)
- Health and disability insurance
Like other property policies, check how your BOP treats flood and sewer backup; the III lists both among coverages to explore. If water damage is a concern for your location, our sister site Home Water Damage Help explainswhy basements leak after heavy rain.
Who qualifies
BOPs are built for small businesses with predictable risks: offices, small retail shops, many service businesses. The III says they generally suit businesses with 100 or fewer employees and revenue up to about $5 million. Each insurer sets its own eligibility rules. The NAIC notes that businesses such as factories and jewelry stores usually need custom coverage, and Wisconsin's regulator says restaurants, florists and garages generally aren't eligible.
Common add-ons
The III notes BOP limits are usually lower than stand-alone policies and suggests considering:
- Employment practices liability (EPLI)
- Cyber liability
- Flood and sewer backup coverage
- A commercial umbrella for higher liability limits
- Business vehicle coverage, including hired and non-owned auto if employees drive their own cars for work
Is a BOP cheaper?
Usually, if you qualify. The SBA says a BOP can save you money, but prices and benefits vary significantly, so compare. Wisconsin's regulator notes property premiums depend on location, building age and type, fire protection, deductible and coverage amount. For broker benchmarks and ways to save, see what small business insurance costs.
How to buy one
- Add up the replacement cost of your equipment, furniture and inventory.
- Check the liability limits your lease or contracts require.
- Estimate how long you could stay closed after a fire, to size business income coverage.
- Get quotes from several licensed agents or insurers, comparing limits, deductibles and endorsements line by line.
Common questions
What does a business owner's policy cover?
A BOP typically covers general liability (injuries and property damage you cause to others), commercial property (your building, equipment and inventory) and business interruption (lost income and ongoing expenses after a covered shutdown).
What isn't covered by a BOP?
Commercial auto, workers' compensation, professional liability, and health or disability insurance. You buy those separately.
Do I need a BOP if I work from home?
It can be a good fit if clients, employees or contractors visit, or you have significant equipment or inventory. Very small home businesses may only need an endorsement on their homeowners policy.
Is a BOP the same as general liability insurance?
No. General liability is one part of a BOP. A BOP adds property and business income coverage, often for less than buying each separately.
How this guide was made
We drafted this guide with help from AI writing tools, working from the sources listed below. Every fact was checked against those sources, and Marcus L. Barber read and reviewed the full page, including its title, description and FAQs, before it was published. AI tools don't decide what we publish; a person does. Our editorial standards.
Sources
- Small business insurance, National Association of Insurance Commissioners
- Understanding business owners policies (BOPs), Insurance Information Institute
- Get business insurance, U.S. Small Business Administration
- Commercial insurance guide, California Department of Insurance
- Consumer's guide to insurance for small business owners (PI-085), Wisconsin Office of the Commissioner of Insurance
- Insuring your home business, Maine Bureau of Insurance