A business owner's policy (BOP) has been compared to a homeowner's policy for business. BOPs were first developed in the 1970s and have become a very popular form of insurance for small to medium sized businesses. BOPs combine some of the basic coverages needed by a typical small business into a standard package at a premium that is generally less than would be required to purchase these coverages separately. Business owners also like the simplified nature of the package as opposed to buying a collection of small policies. The efficiency also appeals to insurance companies and allows them to offer a lower premium for the package.

Most of the coverages that are needed by small and medium sized businesses, with the exception of auto and worker's compensation, are generally included. This not only simplifies the process of buying the basic insurance coverages, but often gives a lower premium for businesses that qualify for a BOP. Business owner's policies basically consist of property coverage, liability coverage and some additional types of coverage that most businesses require. Optional coverages can also be added to meet specific needs of the business.

Typically a BOP policy includes:

• Property insurance - Covers business buildings and their contents, including - but not limited to - inventory, office equipment, furniture and computers, equipment leased or rented for business use, and property in your care belonging to someone else that is accidentally damaged.
• Bodily Injury/Property Damage Liability - covers your company's legal responsibility for the harm it may cause to others. This harm is a result of things that you and your employees do or fail to do in your business operations that may cause bodily injury or property damage due to defective products, faulty installations and errors in services provided. Personal and Advertising Injury - provides coverage for:
  • Libel
  • Slander
  • Defamatory or disparaging material or publication
  • Infringement of the privacy or copyrights of another in your advertisement
  • False arrest
  • Wrongful entry or eviction or other invasion of the right of private occupancy.
• Business Income - covers the loss of income resulting from a fire or other catastrophe that disrupts the operation of the business. It can also include the extra expense of operating out of a temporary location. This coverage can be extended up to an additional year.
• Medical Payments - covers the necessary medical expenses incurred by others (not an insured). Coverage does not imply negligence.
• Equipment Breakdown - pays for physical damage to equipment caused by mechanical and electrical breakdown. It can also cover business income or spoilage losses due to an equipment breakdown and your extra expenses to limit the equipment loss or speed repairs.