Business Insurance Solutions
Business Owners Policy (BOP)
A Business Owners Policy (BOP) is a comprehensive insurance package designed to protect small to medium-sized businesses from various risks. In Pennsylvania, business owners often choose a BOP as a cost-effective way to secure multiple coverages under one policy. Below, we break down the key components and options typically involved in a BOP for businesses in Pennsylvania.
What is a Business Owner Insurance Policy?
A BOP is ideal for businesses with physical assets to protect, regular customer interaction, and relatively straightforward insurance needs. A BOP is best suited for businesses with fewer than 100 employees and annual revenues below a specific threshold, typically those in low- to moderate-risk industries. High-risk businesses, such as large manufacturers or companies in high-liability sectors, may require specialized policies instead.
- Retail Stores
- Restaurants and Cafés
- Professional Services
- Small Manufacturers
- Contractors and Tradespeople
- Healthcare Practitioners
- Personal Care Businesses
- Small Wholesalers
Business Owner Policy Coverages
What coverages do you need?
A Business Owners Policy (BOP) offers essential protection for small to medium-sized businesses by combining Property Insurance for physical assets, General Liability Insurance for third-party claims, and Business Interruption Insurance for lost income during temporary closures. These coverages provide a solid foundation to manage risks and maintain business continuity.
A standard BOP usually combines three primary types of coverage:
- Protects the physical assets of your business, such as buildings, equipment, inventory, and furniture, against risks like fire, theft, or vandalism.
- Covered Events: Named-peril (specific risks like fire) or open-peril (all risks unless excluded).
- Add-ons: Flood or earthquake coverage (not typically included in a standard BOP).
- Covers claims related to third-party bodily injury, property damage, and personal or advertising injury.
- Examples: A customer slipping on your premises, damage caused to another business’s property, or claims of defamation.
- Reimburses for lost income and operating expenses if your business is forced to shut down temporarily due to a covered event.
- Examples: Loss of income due to a fire or natural disaster.
Pennsylvania BOP Insurance Minimum Coverages
In Pennsylvania, there are no state-mandated minimum coverage requirements for Property Insurance, General Liability Insurance, or Business Interruption Insurance within a Business Owners Policy (BOP). These coverages are typically optional but highly recommended to protect your business from various risks.
Full Value
Property Insurance protects your business’s physical assets, including buildings, equipment, and inventory. It is recommended that you cover the full value of the structure or the outstanding mortgage balance.
General Liability Insurance typically includes a Per Occurrence Limit of $1 million, covering individual claims, and an Aggregate Limit of $2 million, protecting against the total claims within the policy period, ensuring coverage for third-party claims such as bodily injury, property damage, or advertising injuries.
6 Months
Business Interruption Insurance should cover at least 6 months of business income, including fixed expenses like rent and utilities, to support your business during periods of temporary closure due to a covered event, such as a fire or natural disaster.
What else should you know about a BOP?
Pennsylvania’s diverse economy, ranging from agriculture to technology, presents unique risks. A well-structured BOP provides:
- Comprehensive Protection: Safeguarding assets, liability, and income under one policy.
- Cost Efficiency: Bundling multiple coverages into a single, discounted package.
- Peace of Mind: Allowing business owners to focus on growth without constant worry about unexpected risks.
Not every business is eligible
Not all businesses qualify for a BOP. Common eligibility criteria include:
- Business Size: Typically for small to medium-sized businesses with fewer than 100 employees.
- Revenue: Annual revenue below a specific threshold (varies by insurer).
- Industry: Suitable for low-risk industries like retail, professional services, or restaurants
- Note: High-risk industries, such as manufacturing or construction, may require specialized policies.
There are exclusions and limitations
While a BOP provides broad coverage, it excludes certain risks.
- Professional services errors (unless Professional Liability is added).
- Employee injuries (covered under Workers’ Compensation).
- Intentional acts or fraudulent activities.
- Flood and earthquake damages (must be purchased separately).
Certain factors affect a BOP cost
The cost of a BOP varies based on factors like:
- Industry and Risk Profile: High-risk industries pay more.
- Business Location: Urban areas or regions prone to natural disasters may have higher premiums.
- Revenue and Size: Larger businesses typically face higher premiums.
- Coverage Limits and Deductibles: Higher coverage limits and lower deductibles increase costs.