The Businessowners Policy (BOP) combines property and liability coverage for eligible small and medium-sized businesses such as small retail stores, offices and apartment buildings. This guide covers the liability side, Section II of ISO's Businessowners Coverage Form BP 00 03 07 13. Section II is built on the same pattern as the Commercial General Liability form (CG 00 01), so most CGL rules carry over; the main differences are in the limits. Insurers may use their own BOP forms, and states amend some conditions.

What Section II covers

• Business liability: damages the insured is legally obligated to pay because of bodily injury, property damage or personal and advertising injury, with the right and duty to defend suits seeking those damages, even groundless ones. Bodily injury and property damage must be caused by an occurrence (an accident, including continuous or repeated exposure to the same harmful conditions).
• Products-completed operations is included: injury or damage from the insured's products or finished work away from its premises.
• Medical expenses: others' reasonable medical expenses from an accident on the insured's premises or from its operations, regardless of fault, if incurred and reported within one year.
• Personal and advertising injury offenses match the CGL: false arrest, malicious prosecution, wrongful eviction or entry, libel and slander, invasion of privacy, use of another's advertising idea, and copyright, trade dress or slogan infringement in an advertisement.
• Coverage territory: the U.S., its territories and possessions, Puerto Rico and Canada, with limited worldwide extensions, like the CGL.

Supplementary payments

Paid in addition to the limits: defense costs, up to $250 for bail bonds (the insurer need not furnish the bonds), appeal and release-of-attachment bond premiums, the insured's reasonable expenses at the insurer's request including up to $250 a day of lost earnings, court costs, and interest.

Who is an insured

Mirrors the CGL:

• Individual: the named insured and spouse, for the business the individual solely owns.
• Partnership or joint venture: partners or members and their spouses, only for the conduct of the business.
• LLC: members for the conduct of the business; managers for their duties.
• Corporation or other organization: executive officers and directors for their duties, and stockholders for their liability as stockholders.
• Employees and volunteer workers for acts within the scope of their duties (not for injury to co-employees).
• Any person (other than an employee or volunteer) or organization while acting as the insured's real estate manager.
• A person with proper temporary custody of property if the named insured dies, only for liability from maintaining or using that property and only until a legal representative is appointed; the legal representative itself.

Limits of insurance

Example: a $1,000,000 Liability and Medical Expenses limit gives a $2,000,000 general aggregate and a $2,000,000 products-completed operations aggregate. Unlike the CGL, the BOP does not show separate aggregate amounts on the declarations; they are set by formula.

Exclusions

Section II carries the CGL's exclusions, including:

• Expected or intended injury (except reasonable force to protect persons or property).
• Contractual liability, except liability assumed in an insured contract such as a lease of premises (an insured who agrees in a lease to indemnify the landlord is covered).
• Liquor liability for insureds in the business of making, distributing, selling, serving or furnishing alcohol.
• Workers compensation and employer's liability, including consequential injury to the employee's spouse, child, parent, brother or sister.
• Pollution, with limited exceptions.
• Aircraft, autos and watercraft owned or operated by an insured, with the CGL's exceptions (small non-owned watercraft, parking autos on or next to the premises). Mobile equipment such as a forklift used on premises is covered.
• Hired and non-owned auto liability is not included but can be added by endorsement (BP 04 04).
• Professional services (for example, a pharmacist's error filling a prescription); some professional exposures can be added back by endorsement.
• Damage to property owned, rented or occupied by the insured or in its care, custody or control.
• Damage to your product, damage to your work, impaired property, and product recall (sistership).
• Electronic data (not tangible property).
• War, including undeclared or civil war.
• For personal and advertising injury: prior publication, knowing falsity, knowing violation of rights and the other CGL Coverage B exclusions.
• Medical expenses exclude any insured (volunteer workers excepted), people hired to work for an insured, tenants on premises they normally occupy, anyone eligible for workers compensation, athletic participants, and the products-completed operations hazard.

Conditions

• Duties after an occurrence, offense, claim or suit: prompt notice, cooperation, and no voluntary payments except at the insured's own cost.
• Legal action against us: a claimant may recover from the insurer on an agreed settlement or final judgment against an insured.
• Separation of insureds: the coverage applies separately to each insured, without increasing the limits.
• Bankruptcy of the insured does not relieve the insurer.
• Section III Common Policy Conditions apply to the whole policy: the first named insured cancels by advance written notice, pays premiums and receives notices; premium audit; inspections; examination of books; transfer of rights only with consent.

What is never in a BOP

Workers compensation, commercial auto on owned vehicles, and professional liability are not part of a BOP. They are bought separately (or, for hired and non-owned autos, added by endorsement).

Common traps

• BOP aggregates are each twice the per-occurrence Liability and Medical Expenses limit.
• Medical expenses are paid regardless of fault, but only if incurred and reported within one year.
• A lease of premises is an insured contract, so assumed liability under a lease is covered.
• Owned autos are excluded; hired and non-owned auto liability needs BP 04 04.
• The BOP liability section is closest to the CGL, not to an umbrella or the homeowners Section II.