Businessowners Policy
What it is
The businessowners policy bundles property, business income, and liability for small and medium businesses that fit eligible classes - typically apartments, offices, and retail, service, and processing risks. Manufacturing, auto sales and repair, bars, banks, and other high-hazard or oversized risks are ineligible and must be written on a commercial package instead.
Property
The BOP covers the building, business personal property, and personal property of others, generally on a broad open-peril basis. Business income is included on an actual-loss-sustained basis for 12 months, together with extra expense, a 72-hour waiting period, and civil authority coverage limited to about four weeks. Optional coverages include outdoor signs, money and securities, employee dishonesty, mechanical breakdown, and spoilage.
Liability
The liability section follows the CGL structure - bodily injury, property damage, personal and advertising injury, and medical expense - with its own aggregate limits. Products-completed operations and fire legal liability are typically built in, and hired and non-owned auto coverage is not.
What is not included
Commercial auto, workers compensation, and health insurance must be purchased separately. A BOP is not a substitute for a business auto policy or a workers compensation policy.
Traps: assuming a manufacturer is eligible, assuming one limit covers both property and liability, and ignoring the valuation and coinsurance provisions when a partial loss occurs.
Worked example: a small retailer with a $1,500,000 building and $400,000 of contents insures the building at $1,500,000 and contents at $400,000. Each limit applies separately with its own deductible, and business income runs 12 months actual loss sustained.