1. Forms
2. BP
3. BP-22-02

Form BP 22 02: Micro-Businessowners Professional Liability Endorsement

1. What the form is

The BP 22 02, Micro-Businessowners Professional Liability endorsement, is designed to add professional liability (also known as Errors & Omissions or E&O) coverage to the Micro-Businessowners Coverage Form (BP 00 04). The BP 00 04, by itself, typically excludes coverage for professional services. This endorsement modifies the policy to provide this crucial coverage for a specific professional service, which must be clearly listed in the endorsement's schedule. It's important to note that this endorsement provides coverage on a claims-made and reported basis, meaning the claim must be made against the insured and reported to the insurer during the policy period or any applicable extended reporting period. Defense costs are typically included within the limit of liability, and a separate deductible usually applies to each claim.

2. Classes of business it applies to

This endorsement is specifically for "micro-businesses," which ISO/Verisk generally defines as businesses with up to four employees (including the owner) and sales not exceeding $500,000. It's intended for businesses in the service industry that meet the eligibility requirements for the Micro-Businessowners Program. While a definitive list of eligible professions is not provided in the search snippets, the nature of the Micro-Businessowners program suggests it's geared towards smaller service and retail risks. Examples could include (but are not limited to, and would depend on insurer underwriting guidelines):

• Small consulting businesses (e.g., marketing, IT, or management consultants)
• Bookkeeping or tax preparation services (excluding CPAs who may have more complex needs)
• Graphic designers or web designers
• Tutoring services
• Pet groomers (note: one snippet mentions an exception to the Damage to Property exclusion for animals in the insured's care for service rendering, which might be relevant here).

It's crucial that the specific service being covered is listed in the endorsement schedule.

3. Special considerations

• Specificity is Key: Coverage only applies to the professional services explicitly listed in the endorsement's schedule. Any services rendered by the micro-business that are not listed will not be covered under this endorsement.
• Claims-Made Basis: Understanding the claims-made nature of the coverage is vital. This differs from the "occurrence" basis typical of general liability. Agents should explain this clearly to insureds, including the importance of timely reporting and potential need for an extended reporting period ("tail coverage") if the policy is non-renewed or cancelled.
• Exclusions: The endorsement contains a specific list of exclusions applicable to the professional liability coverage. These typically include, but are not limited to:
  • Abuse and Molestation
  • Access or Disclosure of Confidential or Personal Information and Data-related Liability
  • Antitrust Laws
  • Bodily Injury (BI) or Property Damage (PD) (as these are typically covered under the general liability section of the BOP, though professional services can sometimes lead to BI/PD claims, making the interaction between coverages important)
  • Breach of Contract and Assumed Liability
• Interaction with BP 00 04: This endorsement is used with the Micro-Businessowners Coverage Form (BP 00 04). The BP 00 04 itself is designed for businesses that may not need building coverage and focuses on business personal property (often on a named perils basis with a base limit like $2,500, though higher limits are available).
• Alternative: Exclusion Endorsement: If a micro-business does not want or qualify for professional liability coverage through the BP 22 02, the insurer might use the Micro-Businessowners Professional Services Exclusion (BP 21 03) to explicitly exclude all professional liability.

4. Key information for agents and underwriters

• Risk Assessment: Underwriters will need to carefully evaluate the specific professional service being declared. The nature of the service, the potential for financial loss to clients due to errors or omissions, and the insured's experience and qualifications will be key factors.
• Pricing: Pricing for this endorsement will depend on the type of professional service, the limits of liability selected, the insured's revenue, claims history, and other risk factors. Given it's for micro-businesses, the premiums are likely intended to be more affordable than standalone professional liability policies for larger firms.
• Coverage Gaps: Agents should be mindful of potential coverage gaps. If a micro-business offers multiple distinct professional services, all of them must be listed and approved for coverage. Also, the exclusions within BP 22 02 (like data-related liability or BI/PD) might necessitate discussions about other potential coverages (e.g., cyber liability, or ensuring the GL responds appropriately).
• Underwriting Guidelines: Insurers will have specific underwriting guidelines detailing which types of professional services are acceptable under the Micro-Businessowners program and this endorsement. Some professions with higher E&O exposure (e.g., architects, engineers, medical professionals) are typically not eligible for BOPs and would require separate, specialized professional liability policies. The BP 21 03 exclusion endorsement specifically lists services like legal, accounting, medical, and engineering as examples of professional services that would be excluded if that endorsement is used.
• Limits and Deductibles: The endorsement will have its own limit of liability (which can be an aggregate limit) and a separate deductible per claim. These should be clearly communicated to the insured. Defense costs are often within the limits, meaning they can erode the total amount of coverage available for settlements or judgments.
• Program Intent: The Micro-Businessowners Program is designed for smaller, simpler risks. If a business grows beyond the eligibility criteria (e.g., more employees or higher revenue than the micro-business definition allows), it will likely need to transition to a standard Businessowners Policy or other commercial package policy, along with potentially a broader professional liability policy.