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3. BP-00-04

Form BP 00 04: Micro-Businessowners Coverage Form

1. What the form is

The BP 00 04 Micro-Businessowners Coverage Form, introduced by ISO/Verisk in 2019, is a simplified Businessowners Policy (BOP) specifically designed for very small businesses. It's based on the standard Businessowners Coverage Form (BP 00 03) but streamlined to cater to the needs of the micro-business sector. This form provides named perils property coverage for business personal property and liability coverage for damage to property of others or injury to others, as well as medical expense coverage. A key distinction is that it generally does not include building coverage, focusing instead on business personal property. The related Micro-Businessowners Policy Declarations form is BP DS 20.

2. Classes of business it applies to

This form is intended for micro-businesses, which ISO/Verisk generally defines as having up to four employees (including the owner) and sales not exceeding $500,000. It's designed to address various service and retail risks. Many of these businesses are home-based, but they can also operate in shared spaces, temporary commercial locations, or mobile spaces like kiosks or food carts. Examples include businesses leveraging platforms like Amazon, Etsy, and eBay.

• Home-based artisans selling crafts online
• Freelance consultants or writers working from home or shared office spaces
• Pop-up retail shops or food vendors at markets
• Small service providers with minimal physical assets

3. Special considerations

There are several important factors to consider when using the BP 00 04:

• No Building Coverage: This form explicitly excludes physical damage coverage for buildings. Businesses needing to insure real property should use other forms like the standard BOP or commercial property forms.
• Business Personal Property Focus: Property coverage is limited to business personal property and is not tied to a specific premises, meaning off-premises coverage is available at full limits. However, "stock" is listed as property not covered, though it can be added via endorsement.
• Named Perils: The property coverage is on a named perils basis, meaning it only covers losses from causes specifically listed in the policy.
• Professional Services: Unlike the standard BOP, the base BP 00 04 form does not automatically exclude professional services liability. However, professional liability can be specifically added for a listed service using an endorsement like BP 22 02 (Micro-Businessowners Professional Liability), or professional services can be excluded using BP 21 03 (Micro-Businessowners Professional Services Exclusion).
• Low Initial Limits: The base property limit is often low (e.g., $2,500), though higher limits are available. The standard property deductible is typically $250, with a $500 option.
• Exclusions: The form contains various exclusions, including but not limited to earth movement, governmental action, nuclear hazard, utility services, war, water, certain computer-related losses, fungi, and viruses. There are also exclusions for acts of dishonesty, false pretense, and inventory shortages if theft coverage is added. Specific endorsements like BP 21 01 (Micro-Businessowners Abuse or Molestation Exclusion) and BP 21 02 (Micro-Businessowners Employment-related Practices Exclusion) are also relevant.
• State Availability: While filed as a multistate form, it was not initially filed in all states (e.g., California, Florida, Georgia, Hawaii as of May 2020). Agents should verify availability in their specific state.

4. Key information for agents and underwriters

Agents and underwriters should be aware of the following practical aspects:

• Simplified Underwriting: ISO designed the program for compatibility with automated or low/no-touch underwriting processes.
• Pricing: The removal of building coverage, many additional coverages found in the standard BOP, and the provision of named perils coverage were intended to reduce premiums compared to a standard BOP.
• Coverage Gaps: The most significant potential gap is the lack of building coverage. Agents must ensure clients with building exposures secure appropriate separate coverage. The named perils basis also means broader coverage found in an "all-risk" or special form policy is not provided without endorsement.
• Endorsements are Key: Due to the streamlined nature of the base form, endorsements play a crucial role in tailoring coverage.
  • BP 20 01 (Micro-Businessowners Retail Endorsement): Modifies coverage for retail risks, can add coverage for stock with a specific limit and theft as a covered cause of loss (subject to a separate deductible and exclusions for dishonesty). It also addresses additional insured status for entities when required by written contracts.
  • BP 20 02 (Micro-Businessowners Service Endorsement): Modifies coverage for service-related exposures, can add theft coverage for property of others in the insured's care, custody, or control (with exclusions for dishonesty and false pretense). It also addresses additional insured status.
  • BP 22 02 (Micro-Businessowners Professional Liability): Allows for the addition of professional liability coverage for specific services listed in the endorsement schedule.
• Risk Assessment: While simplified, underwriters still need to assess the specific exposures of the micro-business. The definition of a micro-business (up to four employees, sales under $500,000) provides a general guideline. Consider the nature of their off-premises operations, reliance on electronic data (note the electronic data exclusion and potential for limited bodily injury exception via BP 15 04 concepts), and any professional liability exposures.
• Declarations Form: The Micro-Businessowners Policy Declarations is form BP DS 20, which should be used in conjunction with BP 00 04.