Business Owners Policy: Cost + Coverage Explained

A Business Owners Policy (BOP) is a bundle of common insurance coverages often offered to small businesses at a reduced rate. You’ll often be able to save 10% of the cost compared to buying each coverage individually. What is included in a COP? What is the average cost per year? Is the cost of a business owner's policy better than purchasing each coverage separately? We cover all of these questions in this BOP cost guide.

What is Included in a Business Owners Policy

A BOP typically includes general liability insurance, commercial property insurance, business interruption insurance, and other industry-related endorsements. 

General Liability Insurance

General liability insurance is the most common business insurance policy—and for good reason. It provides protection for your small business if a third-party (such as a customer) claims bodily injury or property damage. General liability also covers a small business from personal injury claims such as libel, slander, or advertising injury. 

Example: A customer slips and falls on a recently cleaned floor before your employee has a chance to place the “wet floor” sign. The customer hits their head and suffers a concussion. Because you have a general liability policy, the medical costs for their bodily injury and possible lawsuit will be covered by your insurance policy. 

Commercial Property Insurance

Another popular coverage, commercial property insurance protects the assets of your business. Also referred to as business property coverage, it provides coverage for the building itself, expensive equipment, products and goods, furniture, and more. If your business sustains property damage from natural disasters, fire, theft, or vandalism, this policy will provide coverage. Learn more about commercial property coverage in our comprehensive guide. 

Business Interruption Insurance

If your business property is damaged or you otherwise cannot work or operate on your property, business interruption insurance is helpful coverage to have. Also referred to as business income & extra expense, It can cover lost income and profits, operating expenses, payroll, taxes, and even debt repayment. 

Other Endorsements to a BOP

Because a BOP can be customized to your industry, they often include additional coverages or those that can be added as an endorsement. Here are a few common endorsement options that we see: 

• Inland Marine Insurance: This is an endorsement or “floater policy” that covers tools and equipment while they are being transported or stored at a job site. This policy covers equipment that is not permanently attached to your vehicle. 
• Equipment Breakdown Coverage: If your business operates expensive equipment that is crucial to the functioning of your business, consider equipment breakdown coverage. It covers electrical or mechanical breakdown of your equipment.
• Employee Dishonesty: This covers a loss to your business if employee theft occurs.
• Employment Practices Liability Insurance (EPLI): This liability coverage steps in you if you're accused of discrimination, sexual harassment, wrongful termination, etc.
• Cyber Liability: If your business handles customer's personal information, you leave yourself open to risk. If you're hacked, cyber liability can help cover the cost to notify customers, the cost of credit monitoring, and in some cases the ransom amount.

This isn't an exhaustive list, so if there are other coverages that you're interested in, speak to an agent to get the best match for your businesses needs. Please note that additional policies will increase insurance costs per year.

How Much Does a Business Owners Policy Cost?

The average cost of a Business Owners Policy with Progressive is $80 a month, with the median cost being $62 a month. But depending on the small business, it can range anywhere from $500 to $3,000 a year. Here are some average costs for a BOP across different industries:

• A small store might pay $750 or more a year for basic coverage
• A doctors office with expensive equipment might pay $1,500+ for one year of insurance
• A cleaning service might only pay $500 annually
• Because a construction business faces more risks, a BOP might cost them over $850 for one year

What can influence the cost of a BOP?

What Impacts the Cost of BOP Insurance?

• Insurance Company: Different insurance companies include different insurance policies in their BOP policy. It's why we recommend working with an agent to determine what coverage you need. They can help you determine which insurance carrier is the best fit for your business.
• Industry: Your industry or profession will also impact insurance costs. Low-risk industries (such as grocery stores) will pay a lower premium than someone in a high-risk profession, such as an electrician.
• The size of your business: BOP insurance is only available to certain small businesses. If you gross over $5 million a year, you may be unable to obtain a BOP policy. That being said, the larger your business, the more employees you have, and the higher your revenue—the more you can expect to pay.
• The location of your business: Insurance cost is also influenced by the location of your business. Small businesses located in large cities with high crime rates can expect to pay more than small businesses located in rural areas.
• Number of employees: The number of employees can also increase insurance coverage rates.
• Claims history: An insurance company's goal is to protect their bottom-line. If you are purchasing a BOP from a new carrier, they'll look at your previous claims history. If you have a history of submitting numerous claims, your insurance premium may be higher.
• Property Value: It may go without saying, but commercial property coverage for a larger building on a larger property may be given a higher value than a mom & pop shop. Likewise, costs may be less for a newer building versus an older one at more risk of damage.
• Replacement cost vs. Actual Cash Value (ACV): If you choose a policy that replaces damaged items at "replacement cost" you can expect to pay a higher premium than for an "actual cash value" policy. Why? Replacement cost replaces your item with like-kind or quality. With an ACV policy, you get the cost to replace the item—minus depreciation.
• Coverage Limits + deductibles: A BOP with a $1 million per occurrence and $2 million aggregate coverage will be less expensive than a $2 million per occurrence and $4 million aggregate policy. A $1 million/$2 million policy might provide the coverage you need and can save costs. Another way you can lower your BOP insurance premium is to choose higher deductibles. The less an insurance company has to pay out for a loss, the less you have to pay for your premium.
• Insurance policies included: If the BOP policy you choose only includes a bare minimum of coverage, such a general liability and property insurance, you may save money on costs. The more coverage options you choose, the higher the premium.

This isn't an all-inclusive list of everything that can impact the costs. Make sure you consult with an experienced agent to help you get the best coverages for your business—at the most affordable price.

How to Save Money on Your Business Owners Policy

A BOP is often the cheapest coverage small business owners can get. But there are ways to save on your BOP insurance cost:

• Pay up front: Another way to save money is by paying your annual premium all at once. Not all businesses are able to do this, but it can cut costs.
• Invest in Risk management: Do whatever you can to invest in management for your business. While not guaranteed, it can lower the cost you pay per year. Risk management includes things such as installing security systems, extensive employee training, make the environment as low-risk as possible. implement checklists and procedures to follow, and more.
• Choose the right coverage: As stated earlier, the policies and coverages that you choose can impact your costs. Businesses need enough coverage to fully cover claims and mitigate financial losses—balanced with affordable rates.

Get a Free Commercial Insurance Quote

A BOP policy is a great way for your business to save money while protecting your business. To learn more about how much it might cost your business, complete the form above to connect with one of our agents. Or, give us a call at 877-907-5267 to review a free BOP quote.

Related Articles: BOP Policy, General Liability, Business Personal Property Insurance, Business Interruption Insurance