Business Owner’s Policy (BOP), Explained: What It Covers—and What It Doesn’t

Small or mid-sized business owners know that insurance plays an important role in protecting not just their assets, but their peace of mind. With the right coverage in place, you can focus on growing your business, serving your customers, and managing day-to-day operations without constantly worrying about what could go wrong.

However, they’re also aware that the process of getting their business insured can be time-consuming and overwhelming. With multiple policies and providers to consider, technical jargon, and rising costs, it’s difficult to know where to start. 

That’s where a Business Owner’s Policy (BOP) comes in handy.  

What Is a Business Owner’s Policy (BOP)?

A Business Owner’s Policy is a bundled insurance solution created specifically for small to mid-sized businesses. 

It combines essential coverages into a single, convenient package, giving you protection against common risks like property damage, lawsuits, and temporary business interruptions. Compared to purchasing each policy separately, BOP simplifies insurance for busy business owners while keeping costs manageable.

BOPs are well-suited for businesses such as retail shops, offices, service providers, restaurants, and light manufacturing operations. They are designed to address everyday risks that most businesses face, from property damage to customer injury claims.

For many business owners, a BOP serves as a reliable starting point for building a broader insurance strategy. However, it’s not a one-size-fits-all solution. Depending on your industry, operations, or specific risks, you may need additional policies, such as professional indemnity insurance, to ensure full protection.

In this guide, we’ll explain what a BOP is, what it typically covers, and which risks you may need to address with extra coverage to keep your business fully protected.

What Is Typically Covered Under a Business Owner’s Policy?

Although coverage details vary by insurer, most Business Owner’s Policies include the following key protections:

1. Commercial Property Insurance

This coverage helps protect your physical assets, including buildings, equipment, furniture, inventory, and signage, against risks such as fire, theft, vandalism, and certain natural events.

If your business relies on a physical location or valuable equipment, this coverage plays an important role in helping you recover after a loss.

2. General Liability Insurance

General liability insurance protects your business if a third party experiences bodily injury, property damage, or related financial loss due to your operations.

Common examples include a customer slipping on your premises or accidental damage to a client’s property. This coverage helps pay for legal defense costs, settlements, and medical expenses.

3. Business Interruption Insurance

If a covered event temporarily forces your business to close, business interruption insurance helps replace lost income and cover ongoing expenses such as rent, utilities, and payroll.

This support can be vital in helping your business stay financially stable while you recover and reopen.

4. Legal and Medical Expense Coverage

A BOP typically includes coverage for legal defense costs, court fees, and medical expenses related to covered liability claims. This helps reduce the financial strain that legal action can place on a business.

5. Limited Crime Protection

Some Business Owner’s Policies offer basic coverage for losses caused by theft or certain employee-related crimes. The extent of this coverage depends on the specific policy and insurer.

Why a Business Owner’s Policy May Not Be Enough

While a BOP offers broad protection for common risks, it is not designed to address every exposure a business may face. Businesses that provide professional services, employ staff, operate vehicles, or rely heavily on technology often need additional insurance.

Relying solely on a BOP can leave gaps in coverage that may not be immediately obvious. Over time, these gaps can create financial or legal challenges if an unexpected event occurs.

5 Important Policies Not Covered by a Business Owner’s Policy

Below are five types of insurance that are typically not included in a standard Business Owner’s Policy and should be considered separately.

1. Professional Indemnity Insurance

Professional indemnity insurance is especially important for businesses that provide advice or professional services.

It protects against claims of negligence, errors, omissions, or failure to meet professional obligations. If a client claims financial loss due to a mistake or oversight, professional indemnity insurance can help cover legal costs and compensation.

Consultants, accountants, IT providers, designers, and marketing professionals commonly require this coverage.

2. Product Liability Insurance

Businesses that manufacture, distribute, or sell physical products may need dedicated product liability insurance.

This coverage protects against claims arising from defective or unsafe products that cause injury or property damage, going beyond the limited protection offered by general liability coverage.

3. Workers’ Compensation Insurance

A Business Owner’s Policy does not cover employee injuries or illnesses that occur in the course of work. Workers’ compensation insurance is often legally required for businesses with employees.

This coverage helps pay for medical treatment, lost wages, and rehabilitation, while also offering protection for employers against certain employee-related claims.

4. Commercial Auto Insurance

Vehicles used for business purposes are not covered under a BOP. Businesses that own or use cars, vans, or trucks need commercial auto insurance to protect against accidents, vehicle damage, and third-party liability.

5. Cyber Liability Insurance

Most BOPs offer limited or no protection against cyber risks. If your business stores customer data, handles online payments, or relies on digital systems, cyber liability insurance is an important addition.

It helps cover expenses related to data breaches, cyberattacks, legal notifications, and regulatory penalties.

Customizing Your Coverage

One of the advantages of a Business Owner’s Policy is its flexibility. Many insurers allow businesses to enhance their BOP with endorsements or additional policies tailored to specific risks.

By adding the right coverage, business owners can build a more complete insurance solution that grows alongside their operations.

Securing Your Business for the Future

A Business Owner’s Policy offers a practical and affordable way for small to mid-sized businesses to protect themselves against many common risks. It provides a strong insurance foundation and simplifies coverage management.

That said, no single policy can address every exposure. Understanding what a BOP covers and where additional protection, such as professional indemnity insurance, may be needed allows you to make thoughtful, informed choices.

With the right mix of coverage in place, you can focus on running your business with greater confidence and peace of mind.

Author Bio: Carmina Natividad is one of the daytime writers for 360 Underwriting, a specialist agency network supporting insurance brokers with tailored underwriting solutions across sectors like motor, marine, professional indemnity, and plant & equipment. She enjoys crafting practical, jargon-free content that helps brokers better understand complex risks and deliver smarter coverage to their clients.