The Businessowners Policy (BOP) packages commercial property and general liability into one simplified policy for eligible small and medium-sized businesses. Where a larger business assembles a commercial package policy form by form, a BOP comes with most coverages already built in. Exams use ISO's Businessowners Coverage Form BP 00 03 07 13, so the figures below are from that form; insurers may file their own BOP forms and set their own eligibility rules, and states amend some conditions.

Structure

• Section I Property: buildings, business personal property, business income and extra expense, additional coverages and extensions.
• Section II Liability: business liability (bodily injury, property damage, personal and advertising injury) and medical expenses, modeled on the CGL.
• Section III Common Policy Conditions: cancellation, concealment or fraud, examination of books, inspections, liberalization (a 45-day window), premium audit, transfer of rights. The first named insured pays premium, receives return premium and receives cancellation notices.

Who is eligible

BOP eligibility targets smaller, lower-hazard risks: small retail stores, offices and apartment buildings within the insurer's size limits. Large or heavy-hazard operations, such as a large manufacturing plant, are written on a commercial package policy. The appeal is broad packaged coverage with fewer gaps, usually for less than separate monoline policies.

Section I property highlights

• Open perils (risks of direct physical loss) unless excluded.
• No coinsurance clause. Buildings are paid at replacement cost if insured to at least 80% of replacement cost; less than that produces a proportional payment.
• Automatic increases: the building limit rises 8% a year (prorated) unless another percentage is shown; business personal property gets a 25% seasonal increase if the limit equals at least 100% of average monthly values over the prior 12 months.
• Business income and extra expense are built in: actual loss sustained for up to 12 consecutive months after the loss, no dollar limit and no coinsurance. Ordinary payroll is covered for 60 days unless more is shown. Business income waits 72 hours; extra expense does not wait.
• Built-in crime-type coverages: forgery or alteration $2,500; money orders and counterfeit money $1,000.
• Other built-in amounts: outdoor property $2,500; valuable papers and accounts receivable $10,000 each on premises; electronic data and interruption of computer operations $10,000 each per year; pollutant clean-up $10,000 per location per year; fire department service charge $2,500 per premises.
• Optional coverages: outdoor signs, money and securities, employee dishonesty and equipment breakdown protection. Employee theft and mechanical breakdown are excluded unless these options are added.
• Newly acquired property is covered automatically for a limited amount and time.

Section II liability highlights

• Covers bodily injury, property damage and personal and advertising injury, including products-completed operations, with the right and duty to defend.
• Medical expenses regardless of fault, if incurred and reported within one year.
• Limits: one Liability and Medical Expenses limit per occurrence; the general aggregate and the products-completed operations aggregate are each twice that limit.
• Supplementary payments in addition to limits, including up to $250 for bail bonds and $250 a day for lost earnings.
• Exclusions mirror the CGL: expected or intended injury, contractual liability (except insured contracts such as a lease of premises), liquor liability for businesses selling or serving alcohol, workers compensation and employer's liability, pollution, owned autos, aircraft and watercraft, professional services, damage to the insured's product or work, electronic data and war.
• Hired and non-owned auto liability is not included; it is added by endorsement (BP 04 04).

What a BOP never includes

Workers compensation, commercial auto on owned vehicles and professional liability are bought separately.

BOP vs. commercial package policy

Common traps

• Business income is automatic in the BOP; it is a separate coverage form in commercial property.
• No coinsurance in the BOP.
• Employee dishonesty and equipment breakdown are optional, not automatic.
• Hired and non-owned autos are added by endorsement; owned autos need a business auto policy.
• Workers compensation is never part of a BOP.