Businessowners Policy
Purpose and eligibility
The Businessowners Policy (BOP) is a packaged, simplified product for small and medium businesses with low-to-moderate hazard - offices, retail stores, apartment buildings, and service operations. It is not designed for large manufacturing, high-hazard operations, or businesses with substantial auto exposure. It combines Section I property and Section II liability in one form with one set of declarations.
Section I
Property is written on a special (open-peril) basis, covering the building and business personal property. Business income and extra expense for up to 12 months of actual loss sustained and equipment breakdown are included in the standard form - a major difference from a monoline commercial property policy. Newly acquired buildings and personal property receive temporary automatic limits. Endorsements add flood, earthquake, spoilage, and employee dishonesty.
Section II
Business liability covers bodily injury, property damage, personal and advertising injury, and medical expense, including products-completed operations. Standard exclusions track the CGL: automobiles, workers' compensation, professional liability, liquor liability, pollution, expected injury, and damage to property in the insured's care.
Traps
- A BOP never includes workers' compensation or commercial auto.
- Property limits and liability limits are separate; a liability loss does not erode the building limit.
- Eligibility thresholds are tested - a risk that outgrows them must move to a CPP.
- Medical expense coverage applies to third parties, not to the insured's employees.
Rule of thumb
If asked what a BOP includes automatically that a monoline property policy does not, think business income and equipment breakdown. If asked what a BOP cannot provide at all, think auto liability, workers' compensation, and professional liability.