You finally signed the lease on your first storefront. Then the landlord asks for a certificate of insurance showing general liability and property coverage. You’re not even sure where to start. For many small businesses, the answer is a Business Owner’s Policy, or BOP.
Quick takeaway
- A BOP typically bundles property, general liability, and business income coverage.
- It’s designed for many small and mid-sized businesses; eligibility varies.
- Commercial auto, workers’ comp, and professional liability are usually separate.
- Home-based businesses often have little coverage under a homeowners policy.
What is a Business Owner’s Policy?
A BOP is a package policy that bundles several core coverages small businesses commonly need into one policy, often at a better value than buying each separately. Eligibility depends on your business size, industry, and risk, and coverage varies by policy and carrier.
What does a business owner’s policy cover?
- Commercial property: your building, if you own it, and business personal property like equipment, furniture, and inventory.
- General liability: injuries to customers or the public and damage to others’ property caused by your business.
- Business income: lost income and ongoing expenses if a covered loss forces you to close temporarily.
- Extra expense: added costs to keep operating, like temporary space.
- Medical payments: minor medical bills for customers hurt at your business.
What a BOP usually doesn’t include
- Commercial auto: vehicles used for business need their own policy.
- Workers’ compensation: employee injuries are covered by a separate policy.
- Professional liability (E&O): mistakes in professional advice or services.
- Flood and earthquake.
- Cyber liability: often excluded or very limited unless added.
- Employment practices liability: claims like wrongful termination, often available as an add-on.
Who a BOP is good for
BOPs are common for retail shops, offices, restaurants, salons, small contractors, and service businesses. Larger businesses or those with higher-risk operations may need a commercial package policy, which is built from separate coverage parts and can be more customized.
The home-based business gap
Running a business from home? Many homeowners policies limit or exclude business property and business liability. If a client trips on your front steps during a business meeting, or your business laptop and inventory are stolen, your homeowners policy may not respond the way you’d hope. A BOP or home business endorsement may help, depending on your business.
Tennessee workers’ comp rules for small businesses
A BOP doesn’t include workers’ compensation, so it’s important to know Tennessee’s rules. According to the Tennessee Bureau of Workers’ Compensation:
- Construction employers must carry workers’ comp for their employees, even if they have just one employee.
- Most other employers must carry it once they have five or more employees, and part-time employees and working family members count toward that total.
There are exceptions, and the Bureau notes that even if you’re not required, coverage may still be a smart decision. Whether you run a shop in Franklin, a restaurant in Murfreesboro, an office in Nashville, or a service business in Mt. Juliet, Smyrna, or Goodlettsville, your agent can help you sort out what applies to you.
Common mistakes to avoid
- Underinsuring business property. Add up equipment, furniture, inventory, and improvements to your space.
- Skipping business income coverage. Closing for weeks can be harder on a business than the damage itself.
- Assuming the BOP covers vehicles or employees.
- Relying on a homeowners policy for a home-based business.
- Not reading lease requirements. Many leases require specific limits or additional insured status.
Questions to ask your agent
- Does my business qualify for a BOP, or do I need a package policy?
- How long will business income coverage pay?
- Do I need cyber or employment practices coverage?
- Can my landlord be added as an additional insured?
What to do if your business has a claim
Whether it’s a fire, a break-in, or a customer injury, a clear plan helps:
- Make sure everyone is safe, and call 911 if needed.
- Protect your property from further damage with reasonable steps, and keep receipts.
- Document the damage with photos and video, and list damaged equipment and inventory.
- Report the claim promptly to your carrier or agent.
- Track lost income and extra expenses if you have to close or move temporarily. Business income claims depend on good records.
- For customer injuries, write down what happened, collect witness names, and don’t admit fault.
Keep your coverage current as you grow
Your business probably looks different than it did a year ago. Review your coverage when you:
- Hire employees, especially your first or your fifth.
- Buy new equipment or expand inventory.
- Move, open a second location, or sign a new lease.
- Add new services or products.
- Buy or lease a vehicle.
An annual review is a simple habit that helps keep your coverage in step with your business.
Frequently asked questions
What does a Business Owner’s Policy cover?
Typically property, general liability, and business income coverage in one package, with options to add more.
Is a BOP the same as general liability insurance?
No. General liability is one part of a BOP. A BOP also includes property and business income coverage.
Does a BOP cover employees?
It doesn’t include workers’ compensation. Employee injuries need a separate workers’ comp policy.
How much does a BOP cost?
It depends on your industry, size, location, property values, and claims history. A quote is the best way to know.
Does Tennessee require workers’ comp for small businesses?
According to the Tennessee Bureau of Workers’ Compensation, construction employers need it with one or more employees, and most other employers need it with five or more. There are exceptions.
Next step
Learn more about business insurance with Eric Henry, Insurance Agent, and ask Eric to compare BOP and package options across carriers for your business.
Coverage descriptions are general information only; your policy documents determine actual coverage. Availability varies by carrier.
