Business Owners Policy (BOP)

The property side pays to repair or replace the building, if you own it, and the contents you use to run the business: fixtures, furniture, equipment, computers, stock and the improvements you paid for in a rented space. Most BOP forms are written on a special form, meaning any cause of loss is covered unless the policy names it as excluded, and most pay on a replacement cost basis, so the settlement is the cost of new equipment rather than the depreciated value of the old.

The contents limit is the number that goes wrong most often. Owners set it from memory at the first quote and never revisit it, while years of accumulated equipment and stock sit above the limit until a fire settles at the figure on the declarations page. A written inventory, updated at each renewal, is the fix.

When a covered property loss closes the business, business income coverage replaces the net income you would have earned and pays the continuing expenses, payroll among them, for the time it takes to repair and reopen. Extra expense pays what it costs to keep operating meanwhile: a temporary location, rented equipment, overtime to move stock. Most BOP forms write this as actual loss sustained for a set number of months rather than as a dollar limit, an advantage over a standalone property policy where the limit has to be chosen in advance.

The income loss has to follow physical damage to your own premises from a cause the policy covers. A closure because a power line failed two streets away, or because a public order shut the block, is covered only where an endorsement extends to those situations, and the extensions carry shorter periods and separate limits.

The liability section is the same coverage a standalone general liability policy provides, written on the same occurrence basis with the same per-occurrence and aggregate limits: bodily injury and property damage to third parties, products and completed operations, personal and advertising injury, and a small medical payments limit for members of the public. A landlord who asks for a certificate showing general liability is satisfied by a BOP, and the additional insured, waiver of subrogation and primary wording endorsements that leases ask for are all available on the package.

The base form is deliberately narrow, and a BOP is fitted to a business through endorsements. The common ones are equipment breakdown, which covers the mechanical and electrical failure the property form excludes; spoilage, for a restaurant or grocer whose stock depends on refrigeration; employee dishonesty, for theft from the inside; hired and non-owned auto, for the employee who runs an errand in their own car; utility services, which extends business income to an off-premises power or water failure; and a data breach endorsement that adds a limited first-party response to a compromised customer list.

Professional liability is offered as an endorsement for a few classes, such as barbers, funeral directors and printers. For most professions it is not available on the package and is bought as a separate policy.

A BOP does not include workers' compensation, which every state handles separately. It does not cover vehicles titled to the business; those need a commercial auto policy. It does not cover professional advice, errors in the work product, or cyber losses beyond a small endorsement. And it is not a flood or earthquake policy: both are excluded on the property side and written on their own forms. A small business with employees and a van ends up with all three policies, and a general contractor's certificate request will list them.