2026-04-04 · business, guide

Updated: 2026-10-11

By InsuraFAQ Editorial Team · Reviewed for accuracy

Business Owner’s Policy (BOP): What It Covers and Who Needs One

At a glance

A business owner’s policy (BOP) can combine general liability and commercial property coverage for eligible small businesses. Business-income coverage and other terms depend on the insurer’s form and endorsements.

• Cost: Premiums vary by insurer, business operations, location, property values, selected limits, deductibles, and endorsements. Request carrier-specific quotes rather than relying on a national range.
• Potential fit: Many insurers market BOPs to eligible small businesses, but availability and underwriting requirements vary by carrier and industry.

For broader context on how a BOP fits alongside other commercial coverages, see our business insurance hub.

Key takeaways

• A business owner’s policy (BOP) bundles general liability and commercial property coverage into a single, lower-cost package.
• BOP forms and endorsements vary. Ask the insurer which business-income coverage, if any, is included and which causes of loss, limits, and waiting periods apply.
• BOP eligibility is set by each insurer and can depend on industry, operations, revenue, locations, property values, and loss history.
• A BOP does not replace workers’ compensation, professional liability, commercial auto, or cyber liability insurance.
• A bundled policy may simplify administration, but compare its coverage terms and total premium with separate policies before deciding.

A business owner’s policy, commonly called a BOP, combines two essential business coverages into one package: general liability insurance and commercial property insurance. Whether business-income coverage is included, and the terms that apply, depend on the insurer’s form and endorsements.

Insurance carriers created the BOP to give small businesses a simpler, more affordable way to get foundational protection. Instead of managing multiple policies with different renewal dates and coverage terms, a BOP puts the most common coverages under one policy with one premium.

A BOP can be a starting point for a business that needs both liability and property protection, but it is not a substitute for reading the actual policy and confirming the coverages needed for that business.

What a BOP covers

A BOP commonly combines general liability and commercial property coverage. Business-income coverage and the specific covered causes of loss, exclusions, and limits depend on the policy form and endorsements:

General liability

This portion covers third-party claims against your business — see our full guide to general liability insurance for a deeper breakdown. Common claims include:

• Bodily injury: Medical costs and legal fees if a customer or visitor is injured at your location.
• Property damage: Costs if your business damages someone else’s property.
• Advertising injury: Claims related to libel, slander, or copyright infringement in your marketing materials.
• Medical payments: Small, no-fault medical payments for minor injuries on your premises.

Commercial property

This portion covers your business’s physical assets, including:

• Building: The structure you own or are responsible for insuring under your lease.
• Business personal property: Equipment, furniture, inventory, and supplies.
• Outdoor signage and fixtures: Signs, fencing, and permanently installed equipment.
• Documents and records: Paper and electronic records that would be costly to recreate.

Business interruption

Business-income coverage, when included, may help with certain lost-income and continuing-expense losses after a covered cause of loss. The policy controls what is covered and for how long:

• Lost income: Revenue you would have earned if a covered event (fire, storm, vandalism) had not forced you to close.
• Operating expenses: Ongoing costs like rent, utilities, and payroll that continue while you are closed.
• Temporary relocation: Costs to operate from a temporary location while your building is repaired.

What a BOP does not cover

A BOP provides broad foundational coverage, but it has important exclusions. The following risks require separate policies:

• Workers’ compensation: Required in most states for businesses with employees. Covers employee injuries and illnesses on the job. Learn more about workers’ compensation.
• Professional liability (errors and omissions): Covers claims that your professional advice or services caused a client financial harm. Learn more about professional liability.
• Commercial auto: Covers vehicles owned or used by the business. Personal auto policies do not cover business use. Learn more about commercial auto.
• Health insurance: Employee health benefits are separate from property and liability coverage.
• Cyber liability: Covers data breaches, ransomware attacks, and related costs. Learn more about cyber insurance.
• Flood and earthquake: Typically excluded from property coverage and require separate policies.
• Marine exposures: Vessels, cargo in transit, and marina operations are excluded from BOPs and require marine coverage written on a specialty form.

Who needs a BOP

BOPs are designed for small to mid-sized businesses that meet certain eligibility criteria. Common characteristics include:

• Physical location: Retail stores, offices, restaurants, salons, and workshops.
• Size and operations: Insurers set their own underwriting thresholds; employee count and revenue may be relevant, but there is no universal BOP cutoff.
• Low to moderate risk: Businesses without unusually high liability exposure.

Businesses that commonly purchase BOPs

• Retail shops and boutiques
• Restaurants and cafes
• Professional offices (accounting, consulting, real estate)
• Service businesses (salons, repair shops, cleaning companies)
• Small contractors
• Nonprofit organizations

Businesses that may not qualify

• Large corporations with complex risk profiles
• Manufacturers with significant product liability exposure
• Businesses with high employee counts or large payrolls
• Companies in high-risk industries (mining, heavy construction)

These businesses typically need customized commercial packages rather than a standard BOP.

BOP vs. buying policies separately

A BOP may be practical for an eligible business, but the right arrangement depends on the operations, required limits, property exposure, and policy terms.

How much a BOP costs

There is no reliable national BOP price that fits every small business. Insurers price policies using the business’s operations, location, property values, payroll or revenue where applicable, claims history, limits, deductibles, and selected endorsements. Compare written quotes with the same limits and deductibles before choosing coverage.

Premiums may be deductible as a business expense when they meet federal tax rules; consult the IRS guidance or a qualified tax professional for your situation.

Factors that affect BOP pricing

• Industry: Higher-risk industries pay higher premiums.
• Location: Areas prone to natural disasters, crime, or high litigation costs increase rates.
• Revenue and payroll: Larger operations cost more to insure.
• Property value: More valuable buildings and equipment increase the commercial property portion.
• Claims history: Businesses with prior claims typically pay more.
• Coverage limits and deductibles: Higher limits increase premiums; higher deductibles reduce them.

These ranges are approximate. Get quotes from multiple carriers for pricing specific to your situation. Learn how to compare insurance quotes.

How to choose a BOP

1. Evaluate your coverage needs

Start by listing your business property (building, equipment, inventory) and estimating its replacement value. Then consider your liability exposure based on foot traffic, client interactions, and contractual requirements.

2. Check policy limits

Make sure the general liability limits meet any requirements from your lease, contracts, or licensing. Common limits are $1 million per occurrence and $2 million aggregate.

3. Review available endorsements

Many carriers offer endorsements (add-ons) that expand your BOP. Common options include:

• Cyber liability: Basic data breach and cyber event coverage.
• Equipment breakdown: Covers mechanical and electrical equipment failure.
• Hired and non-owned auto: Covers liability when employees use personal or rented vehicles for business.
• Employee dishonesty: Covers theft by employees.
• Spoilage: Covers perishable inventory lost to equipment failure or power outage.

4. Compare quotes from multiple carriers

Request quotes from at least three insurers. Compare not just price, but also limits, deductibles, included coverages, and endorsement options. An independent agent can help you compare options across carriers.

5. Read the fine print

Before purchasing, review the policy’s exclusions, coverage triggers, and claims process. Ask the carrier to explain anything that is unclear.

Frequently asked questions

What does a business owner’s policy not cover?

A BOP excludes several major risks that require their own policies. The bundled package focuses on general liability, commercial property, and business interruption — anything outside those three lanes is generally excluded.

The standard exclusions are:

• Workers’ compensation: Employee injuries and illnesses on the job. Required in most states for businesses with employees.
• Professional liability (errors and omissions): Claims that your professional advice or services caused a client financial harm.
• Commercial auto: Vehicles owned or used by the business. Personal auto policies do not cover business use.
• Cyber liability: Data breaches, ransomware, and related response costs.
• Flood and earthquake: Typically excluded from property coverage; purchased separately if needed.
• Employee theft and dishonesty: Excluded by default under the standard ISO BOP form; available as an endorsement.

How much does a BOP cost per month?

There is no dependable monthly BOP price for every business. Ask each insurer whether installment billing is available and compare the full premium, fees, limits, deductibles, and endorsements—not just the monthly payment.

Is a BOP required by law?

No. Unlike workers’ compensation or commercial auto (in some states), a BOP is not legally required. However, landlords, lenders, and clients often require proof of general liability and property coverage, which a BOP provides.

Can I add coverage to a BOP?

Yes. Most carriers offer endorsements that let you add coverages like cyber liability, equipment breakdown, hired auto, and employee dishonesty. You can customize the policy to fit your business without buying entirely separate policies.

Does a BOP cover employees?

A BOP covers third-party injuries (customers, visitors), not employee injuries. Employee injuries and work-related illnesses are covered by workers’ compensation insurance, which is a separate policy required in most states.

What is the difference between a BOP and general liability?

General liability covers third-party injury, property damage, and advertising injury claims. A BOP includes general liability plus commercial property coverage and business interruption, bundled into one policy at a lower combined cost.

Can I get a BOP if I work from home?

Some carriers offer BOPs for home-based businesses, though coverage may be more limited. If your homeowners or renters policy does not cover business equipment or client visits, a BOP or in-home business endorsement can fill that gap.

Next steps

1. Inventory your business property. List all equipment, furniture, inventory, and supplies. Estimate the cost to replace each item at current prices.
2. Estimate your liability exposure. Consider how many customers visit your location, what services you provide, and whether contracts require specific liability limits.
3. Check your lease and contracts. Many commercial leases and client contracts specify minimum coverage amounts.
4. Get quotes from at least three carriers. Use an independent agent or request quotes directly. Compare limits, deductibles, endorsements, and total cost.
5. Review endorsement options. Decide whether you need add-ons like cyber liability, equipment breakdown, or hired auto coverage.
6. Review annually. As your business grows, your coverage needs will change. Reassess property values, revenue, and liability exposure at each renewal.

Sources

• U.S. Small Business Administration, “Get Business Insurance”
• National Association of Insurance Commissioners, “Business Insurance”
• Internal Revenue Service, “Publication 535, Business Expenses”