Business Owner Policies (BOP) are great tools for small business owners in the restaurant, bar and breweries industries. However, not every business can get a BOP. Let’s look at what businesses can get a BOP insurance plan and who needs one.
What is a BOP in Insurance?
A Business Owners Policy (also referred to as a “BOP”) is a commercial insurance product that combines business property insurance and liability insurance into one policy. It is a convenient option for small business owners who want a simple and accessible policy. In addition, a BOP often comes with a discount for combining the two types of coverages together.
What is included in a business owners policy?
1. Commercial Property Insurance – Commercial property insurance covers your bar or brewery from damage to physical property. Examples of claims include damage from fire, theft, or covered disasters or events.
Additionally, it can often cover loss of income when covered events prevent your business from operating. This last part is called Business Interruption (BI) Insurance, and if your company has less than 100 employees and revenue of $5 million or less, you can often include this coverage.
2. Commercial Liability Insurance – If your business has the possibility of being sued then you need liability insurance. Bars and breweries serve alcohol, so liability insurance is necessary. However, the liability insurance in a BOP policy is limited, so even if your bar is a qualified fit for a BOP, you still may need extra insurance in the form of liquor liability insurance.
Remember, BOP’s are often for small businesses. If your company is more complex or larger in size, separate property and liability policies may be a better option.
What is Not Covered in a BOP policy?
While a BOP is a combined insurance coverage policy, it only covers two types of insurance: property and liability.
As a restaurant or brewery owner, you will also need:
1. Workers’ compensation insurance – Covers injury and illness of your workers due to work related events. This is compulsory insurance, meaning that you must carry it in most states, by law.
2. Liquor liability insurance – Covers injury or property damage to third parties that results from the actions of your patrons that you serve alcohol. General liability may not be enough or cover these alcohol related instances, so it is a necessary addition to most insurance plans for bars, breweries or restaurants.
3. Other insurance – Situationally, you may also need commercial auto, umbrella, health, disability or life insurance for employees or key partners.
Other Frequently Asked Questions about BOP Insurance
What is the difference between general liability and business owners policy?
General liability is just one part of a business owner’s policy. If you have a BOP, it will cover general liability. However, as another option, you can have a separate policy for your general liability (and as a bar, you may also have liquor liability). Then, in addition, you would have a stand alone commercial property insurance policy. Larger companies will typically have these policies held separately, while smaller companies will often have them combined together into a BOP.
What does a business owner’s policy cost?
Costs for a BOP policy are very relative to the scale and operations of your bar or brewery. In order to understand what coverage you need, you will need to get a quote from an insurance agent or broker. We suggest getting a few quotes from different insurance companies to compare prices. Importantly, make sure that when you are comparing you are looking at quotes that include the same amount of coverage for each of the BOP’s elements, including liability and property coverage.
Factors insurance companies take into consideration when underwriting a BOP policy for your business include: size of your company (number of employees, revenue), property leased or owned, building costs and operating expenses, and your insurance claims history. Your location exposures will also play into your costs, along with what type of goods and/or services you provide.
What are some business owners’ policy exclusions?
Common exclusions for a BOP include: not offering coverage for large businesses, workers compensation insurance, liquor liability insurance or special insurances like cyber security.
What is the best business owner’s policy insurance?
Similar to our price question, when looking for the best business owners policy, the answer will be relative to your bar or restaurant’s unique situation. Every insurance company or carrier has a specific appetite for what kinds of companies they want to offer coverage to. So, the most efficient way to find the best policy for you is to talk to an independent insurance agent and let them compare several plans with several different carriers.
What are the 3 sections of a business owners policy?
Sometimes, brokers will refer to the “three parts of a BOP”, in this case, they are referencing
1. General liability insurance
2. Commercial property insurance
3. Business interruption insurance
While business interruption insurance is not included in all BOP policies, it is included or added on often enough to be lumped together with liability and property insurance. The two main offerings are commercial property insurance and general liability.
Conclusions on Your Business Owners’ Policy Needs
As a bar, brewery or restaurant owner you may find that a BOP covers your insurance needs if you are on the small end. However, if you are a larger business, you may find that a BOP may not be your best bet – if it is even available to you.
Talk to your insurance agent or broker to help you find coverage for general liability and property insurance. That might be two separate plans, or it may be a BOP. Please feel free to reach out to us if you have any questions.