Introduction
For many small to mid-sized business owners, protecting their operations from unexpected risks is essential—but navigating multiple insurance policies can be costly and complex. A Business Owners Policy (BOP) offers a streamlined solution by bundling key coverages- property insurance, general liability, and business interruption into one convenient, cost-effective package. Tailored for businesses with predictable exposures and a moderate level of risk, a BOP is ideal for retail shops, service providers, and small office-based companies. This overview will help you understand how a BOP works, what types of businesses qualify, and why it may be a smart choice for safeguarding your company’s future.
What is a business owners policy (BOP)?
A business owners policy (BOP) can insure small and medium-size businesses against multiple business perils by providing property, liability, and business interruption insurance coverage. It is a type of commercial package policy and is designed for relatively small retail businesses, certain processing and service businesses, and businesses that operate out of small office, condominium, or apartment buildings. The typical landlord or business owner who has a business owners policy has a single location business, with predictable risks and, at most, a moderate level of insurance exposure. The property coverage includes buildings and business owned personal property. The liability coverage includes bodily injury, property damage, personal injury, and advertising injury.
What types of businesses are typically eligible for a BOP?
The types of businesses that typically can obtain a BOP include:
- Appliance repair shops
- Bakeries
- Dental laboratories
- Funeral homes
- Hair salons
- Laundries and dry cleaners
- Locksmiths
- Photocopying centers
- Shoe repair shops
- Watch, clock, and jewelry repair shops
What types of businesses aren’t eligible for a BOP?
The following types of businesses have risks outside the scope of a business owners policy and thus are ineligible for this coverage:
- Bars
- Restaurants
- Banks and other financial institutions
- Auto dealers and repair shops
- Manufacturers
- Amusement parks
- Theaters
What is the structure of a BOP?
The structure of a BOP involves four parts: declarations, policy conditions, a business owners liability form, and either a standard or special property form. The declarations and conditions are much like those for a commercial package policy. The liability form, as mentioned above, covers bodily injury, property damage, personal injury, and advertising injury. You have the option of either a standard property form that insures against specific named perils, or a special property form that offers open peril coverage.
Conclusion
A Business Owners Policy is an efficient and affordable way for qualifying small and medium-sized businesses to gain essential coverage in one policy. By combining property protection, liability coverage, and income replacement in the event of business interruption, a BOP offers peace of mind and simplifies risk management. While not every business type is eligible—particularly those with higher liability or operational risks—those that do qualify can benefit from comprehensive protection tailored to their unique needs. As with any insurance decision, consulting with an experienced advisor can ensure your policy fits your business and scales with its growth.
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Source:
Broadridge Investor Communication Solutions, Inc. prepared this material for use by Scarlet Oak Financial Services.
Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on individual circumstances. Scarlet Oak Financial Services provide these materials for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
