Business Owners Policy (BOP) discounts and questions
One policy that packages the building and contents, general liability and lost income for a small business that fits a carrier's eligibility rules. It costs less than the same parts bought separately, and the eligibility test, not the price, decides whether it is the right form.
Discounts carriers commonly offer
- Package credit
- The BOP itself is the discount: the combined premium is set below what property and general liability would cost separately for an eligible class.
- Protective devices
- Central-station burglar and fire alarms, sprinklers and a monitored suppression system in a commercial kitchen each earn a credit on the property rate.
- Claims-free history
- Several years with no property or liability claim lowers the rate, and a single small claim can cost more in lost credit than it paid.
- Building age and construction
- Newer masonry or steel buildings, and older buildings with updated roofs, wiring, plumbing and heating, rate lower than frame buildings with original systems.
- Higher deductible
- Raising the property deductible from the carrier's default to a figure the business could absorb lowers the premium each year.
Questions people ask
How do I know whether my business qualifies for a BOP?
Each carrier keeps its own eligibility list, and the lists differ enough that a business one carrier declines another writes without comment. The usual tests are the class of business, annual sales, building size, and for restaurants the share of sales that is alcohol and whether there is cooking with grease. Light-trade contractors qualify with some carriers if they do no work at height. Send us what the business does, where it is and roughly what it sells, and we can tell you which of the carriers we represent will write it on the package.
My landlord's lease asks for property and liability coverage. Does a BOP satisfy it?
Almost always, and it is what the lease is usually written expecting. The lease will name a liability limit, ask that the landlord be added as an additional insured, and often ask for a waiver of subrogation and coverage on the tenant improvements and the glass. All of those are standard BOP endorsements. Bring us the insurance section of the lease before you sign it; the analysis checks each requirement against the policy and lists the ones that need an endorsement.
Why is business income coverage such a large part of the value?
Because a fire that destroys a shop's contents is a loss the owner can picture, and the months of rent, payroll and lost sales that follow are the loss that actually ends the business. On a standalone property policy the income coverage is optional, has to be limited to a chosen figure, and is the item owners most often decline to save premium. On a BOP it is built in on an actual loss sustained basis: the carrier pays what the books show was lost for the restoration period, up to the time limit in the form.
Does a BOP cover my equipment when it leaves the shop?
Only a little. The property section has a small off-premises extension for contents temporarily away from the location, and a separate small limit for property in transit. A contractor whose tools live in the truck, a photographer whose cameras travel to every job, or a mobile groomer with a fitted van has most of their equipment outside the building most of the time, and needs an inland marine floater scheduled alongside the package.
What deductible should I carry on the property side?
One the business could pay from cash on a bad day without borrowing. The arithmetic is short: suppose a higher deductible saves a few hundred dollars a year and raises what you pay on a claim by a few thousand; if the business goes several years between claims, the higher deductible wins, and if it cannot absorb that figure, the lower one is right even though it costs more. Business income coverage carries a waiting period of a few days rather than a dollar deductible, and that is not adjustable on most forms.