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Business Owners Policy (BOP)

Updated: Feb 25



Business Owners Policy also known as BOP insurance is a commercial package policy that combines both property and liability coverage. It is the best option for small to medium sized businesses like apartments, retail stores, restaurants, and office based businesses.


Below are the Common Included Coverage in a Business Owners Policy:


Building Coverage

The limit is set to the Building Replacement Cost. Some may use ACH or actual cash value, which is the Replacement Cost less the Depreciation Cost. Insuring the building to ACH may result to lower premium since it allows the insured to use a lower building cost but the insured will be penalized later as claim payment will be lower than what the repairs or replacement will be.


Business Personal Property

It refers to the tangible and movable items owned by the company. It includes office furniture, office computer, office supplies, office interior furnishing, equipment inside or within 100 feet the business premise, printers, phones, tablets, and other electronic devices. It is important to have an inventory of the business assets so all are included in the blanket coverage of Business Personal Property.


Liability

This coverage provides the business protection against claims resulting from injuries to third parties and damage to other people's properties. Liability will cover defense cost, medical expenses of the injured third-party, settlement, judgement, attorney fees and other legal costs. The usual limit of liability is $1 Million Each Occurrence, $2 Million Aggregate.


Accounts Receivable

It is the balance of money due to a company for goods or services delivered or used but not yet paid for by the customers. In short, it is the money owed by customers for purchases made on credit. This coverage is protection for losses incurred by the policyholder when the insured business is unable to collect credit from the customers. It covers direct-losses from non-paying customers and also covers indirect costs such as loan interest payments.


Money and Securities (inside and outside the premises)

Inside coverage applies to loss of money and securities that occurs within the premises or a bank. Examples are when a thief steals from the cash drawer or the money in the safe deposit is lost due to fire.


Outside coverage applies to money and securities that are lost outside the premises. The loss must occur while the items are in the custody of a messenger or an armored motor vehicle company. In addition, the loss must result directly from theft, disappearance or destruction. Messengers are any employees that have care and custody of property outside the premises. This also means the owner, a relative, or any of the partners.


Fire Department Charge

It is to cover charges imposed by a fire department for their service to fight a fire. The usual amount of coverage is $1,000 to $2,500.


Outdoor Property

It cover business outdoor items like signs, fences, shrubs and plants, antennae, satellite dishes, outdoor tables and chairs, lights, and other fixtures.


Valuable Papers and Records

It covers all printed business forms, documents, and records except money and securities. In case the ones mentioned earlier are damaged, the insurance company will reimburse the policyholder for the value of any valuable papers like wills, trusts, and corporate charters.


Water Back-up and Sump Overflow

It is a special endorsement that provides coverages for damage from water that backs up through sewers, drains or overflows from a sump, French drain or sump pump.


Business Income and Extra Expense

Common coverage is 12 months actual loss sustained. It provides coverages when the business has to shut down due to a fire or other covered cause of loss. The insurance company will pay for lost income and covered expenses like rent, payroll, and other financial responsibility of the business while the covered business property is still being replaced or repaired.