What a Business Owners Package covers
A Business Owners Package Policy (BOP) combines property, liability, and business-interruption insurance into one policy, generally built for small and medium-sized businesses. It responds to two broad situations: damage to or destruction of the business's property, and bodily injury or property damage to someone else caused by the business's actions or inaction.
BOPs are typically available to businesses such as office buildings of three stories or fewer (up to 100,000 square feet), apartment buildings of six stories or fewer (up to 60 units), and other buildings up to 7,500 square feet used mainly for mercantile, apartment, office, or general trade purposes. Businesses typically excluded include banks, condominiums, bars, restaurants, auto-related businesses, recreational vehicle operations, contractors, and manufacturers.
Liability coverage
This part of the policy protects the business, up to its limits, against a legally enforceable claim for bodily injury, property damage, or personal injury arising from the business's actions or inaction.
It typically includes: (1) non-owned automobiles used in business operations (vehicles the business actually owns are generally excluded); (2) host liquor liability for business social events — an office party would typically be covered, since it's incidental to normal operations, though actually running a liquor store would not be; (3) fire and explosion legal liability, relevant when the business rents its space — if a fire or explosion traced to the business's negligence damages the building, the landlord's insurer can pursue the business for reimbursement; and (4) products and completed-operations coverage.
Typically excluded from this section are professional liability, the business's own owned vehicles, aircraft operations, workers' compensation, liquor liability beyond hosting business events, and off-premises boat operations.
Property coverage
Property coverage under a BOP generally spans three areas:
Coverage A (Building): Covers all buildings on site, generally without a coinsurance requirement and on a replacement-cost basis — including the buildings themselves, the owner's property used to maintain them or provided to tenants, permanent fixtures and equipment, tenant improvements and betterments, debris removal, and outdoor furniture and fixtures.
Coverage B (Business Personal Property): Covers the business's own property on the premises, along with property of others in the business's care, custody, or control, plus limited coverage for property temporarily away from the premises or newly purchased for a new location.
Coverage C (Loss of Income): Reimburses lost business rental income, losses from an interruption to normal business operations, and extra expenses incurred to resume operations after damage from a covered peril. Section I coverage can usually be broadened, by endorsement, to include burglary, robbery, theft, employee dishonesty, boiler and machinery explosion, and — separately — earthquake damage.