Professional Liability
Business Owners Policy (BOP): What Small Businesses Need to Know
By the PolicyZen Team · Updated March 2026 · 8 min read
Small business owners who think their homeowners policy covers their business activities are usually wrong. Home-based business exclusions in personal policies are standard. The Business Owners Policy (BOP) was designed specifically for small and mid-sized businesses — bundling three core commercial coverages into one affordable package.
A Business Owners Policy (BOP) combines General Liability (injury/damage claims against the business), Commercial Property (business equipment, inventory, building), and Business Interruption (lost income if the business can't operate after a covered loss) into a single policy at a lower combined price than buying them separately.
The Three Core Coverages
- General Liability: Customer slip-and-fall at your location, property damage caused by your work, advertising injury (libel, slander, copyright claims in your marketing). Pays legal defense costs plus settlements/judgments. Most common limit: $1M per occurrence / $2M aggregate.
- Commercial Property: Your business equipment, furniture, inventory, and the building (if you own it) against fire, theft, vandalism, and weather. Both ACV and replacement cost options available.
- Business Interruption (BI): Pays your normal operating expenses and lost profits if a covered property loss forces a temporary closure — fire destroys your shop, you're still paying rent and salaries. BI is the coverage most businesses discover they needed only after a disaster.
What BOP Does NOT Cover
- Professional liability / E&O: Mistakes in your professional services — requires a separate policy
- Workers' compensation: Required separately in all states if you have employees
- Commercial auto: Vehicles used for business require separate commercial auto coverage
- Flood and earthquake: Excluded from standard BOP just as in homeowners insurance
- Cyber liability: Growing gap — cyber endorsements available on some BOPs
- Employment practices liability: Wrongful termination, discrimination claims — separate EPLI policy needed
Who Qualifies for a BOP?
BOPs are designed for small to medium businesses: fewer than 100 employees (varies by insurer), annual revenues under $5M–$10M, operating from a single or small number of locations. High-risk industries (contractors, manufacturers, restaurants) may not qualify for a standard BOP and need individually underwritten commercial packages.
Home-based businesses are not covered by your homeowners policy. If a client trips on your property while visiting for a meeting, if your business equipment is stolen, or if you're sued for a client's business loss — your homeowners policy won't cover it. A home-based business needs either a home business endorsement on the homeowners policy or a standalone BOP, depending on the business type and risk level.
How much does a BOP cost?
Annual BOP premiums for small businesses typically range from $500 to $3,500 per year depending on business type, size, location, and claims history. A small retail shop or service business might pay $800–$1,500/year. A restaurant or business with significant foot traffic pays more. The bundled BOP is usually 15–25% cheaper than buying GL, property, and BI separately.
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