Business Owner's Policy (BOP)
Most small businesses buy insurance in the form of a Business Owner's Policy, or “BOP”. These are package policies that cover major property, liability and business interruption exposures. For example, if your restaurant's roof comes off in a wind storm, causing your business to close for two months. A BOP would provide coverage in several ways. First, it would cover the cost of repairing the roof outside, and repairing or replacing your furniture, computers and supplies inside. Then, it would also cover your payroll and taxes for the two months the business was closed. And if one of your clients was in your building during the storm and was injured by falling debris, the BOP would cover their medical bills.
Let’s look at these 3 types of coverage in more depth:
- Property coverage generally includes owned or leased buildings; the contents of buildings, such as furniture, supplies, fixtures, machinery, equipment, inventory and building improvements; glass and signs; and some property off of the premises.
- Liability insurance covers your business if it is sued for something the business did or failed to do that caused injury or property damage to someone else. Liability insurance covers damages and settlements stemming from a lawsuit, up to the policy limits. Many liability policies also cover attorneys' fees and other costs associated with defending against a lawsuit.
- Business Interruption coverage can pay for your business' fixed costs, such as rent, payroll and taxes, if your enterprise suffers a property loss that causes it to close or slow down for a period of time while repairs are made.
Usually a BOP doesn't cover damage due to earthquakes or floods; workers' compensation; group health, life or disability insurance; insurance for company-owned vehicles; and specialized liability risks such as professional liability, director's and officers, employment practices and malpractice.
