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Business Owner’s Policy

A business owner’s policy (BOP) has been compared to a homeowner’s policy for business. BOPs were first developed in the 1970s and have become a very popular form of insurance for small to medium sized businesses. BOPs combine some of the basic coverage’s needed by a typical small business into a standard package at a premium that is generally less than would be required to purchase these coverage’s separately. Business owners also like the simplified nature of the package as opposed to buying a collection of small policies. The efficiency also appeals to insurance companies and allows them to offer a lower premium for the package.

A similar packaged product is also available for farmers.

Most of the coverage’s that are needed by small and medium sized businesses, with the exception of auto and worker’s compensation, are generally included. This not only simplifies the process of buying the basic insurance coverage’s, but often gives a lower premium for businesses that qualify for a BOP. Business owner’s policies basically consist of property coverage, liability coverage and some additional types of coverage that most businesses require. Optional coverage’s can also be added to meet specific needs of the business.

Typically a BOP policy includes:

A number of other coverage’s such as flood insurance or earthquake insurance or owned vehicle coverage and specialized liabilities are generally not included in POBs. Some of these may be available separately for extra premiums.

One of the distinguishing features of BOPs is that most automatically include business income and extra expense coverage (subject to some limitations).