Introduction
When it comes to protecting your small or medium-sized business, one of the most vital elements is having the right property coverage in place. A Businessowners Policy (BOP) not only bundles liability and property insurance into one convenient package, but it also offers broad property coverage that can be tailored to your specific needs. This comprehensive guide will explain what BOP property coverage includes, its limitations, and how it can be a cost-effective solution for safeguarding your business’s assets.
A. Property Coverage Provided by the Businessowners Policy (BOP)
1. Buildings, Structures, and Related Property
The BOP provides property coverage for the physical structures where your business operates. This includes:
-
Completed Additions: Newly added parts of a building are automatically covered.
-
Indoor and Outdoor Fixtures: This includes items such as lighting and signage.
-
Permanently Installed Machinery or Equipment: Any machinery or equipment installed as part of the building is covered.
For landlords, any personal property provided to tenants, such as refrigerators or dishwashers, is also protected under a BOP.
Additional Property Covered: If it’s not covered by other insurance, the following property is also included:
-
Additions Under Construction: Structures in the process of being built.
-
Renovations and Repairs: Any ongoing repairs or renovations.
-
Supplies, Equipment, and Temporary Structures: As long as they are within 100 feet of the insured premises.
2. Business Personal Property (BPP)
BOP covers business personal property, which includes the contents of your business location. Covered business personal property includes:
-
Property Used in the Business: All items necessary for business operations.
-
Property of Others: Property that’s under your care but belongs to others.
-
Tenant Improvements: Fixtures, alterations, and additions that cannot legally be removed.
-
Leased Property: Personal property leased by your business, which you are contractually responsible for.
-
Exterior Building Glass: If you’re a tenant and the building’s glass is in your care.
Important Tip: Business owners should consult legal counsel when reviewing lease agreements to avoid assumptions that could lead to major coverage shortfalls.
3. Types of Property That Are Not Covered
While BOP offers extensive coverage, there are some exclusions. These include:
-
Accounts, Bills, and Evidence of Debt
-
Aircraft and Autos: Vehicles that can be registered as motor vehicles.
-
Landscaping: Lawns, trees, shrubs, and plants, unless covered under specific extensions.
-
Money or Securities: These can be covered by an optional coverage add-on.
4. Causes of Loss Covered
When written on a named perils basis, the BOP covers specific perils such as:
-
Fire
-
Lightning
-
Explosion
-
Windstorm
-
Vandalism
-
Sinkhole Collapse
For more comprehensive coverage, it’s recommended to opt for open perils, where all risks are covered unless specifically excluded by the policy.
BOP Property Coverage Exclusions
Exclusions are part of any insurance policy, and BOP is no different. Common exclusions include:
-
Earth Movement: Although fire or explosion following an earthquake may be covered.
-
Flooding and Water Damage: Including sewer backup and mudslides.
-
Pollutants: Unless they are the result of a covered peril.
BOP Property Coverage Extensions
BOP offers several coverage extensions that enhance the standard property coverage:
-
Newly Constructed or Acquired Property: Coverage for new buildings or additions.
-
Personal Property at Other Locations: Covers property temporarily stored at a different location.
-
Outdoor Property: Includes coverage for fences, antennas, and signs.
Additional Coverages Under BOP Property Coverage
1. Business Income
BOP covers business income lost due to property damage from a covered peril. The coverage is provided on an actual loss sustained basis, typically for 12 months following the loss.
2. Extended Business Income
After operations resume, extended business income coverage continues for an additional 60 days, helping businesses return to pre-loss revenue levels.
3. Extra Expense
BOP covers extra expenses incurred to avoid or minimize the suspension of operations, such as relocating to a temporary space.
4. Business Income from Dependent Properties
If your business income is dependent on another business that suffers property damage, BOP provides coverage for your lost income.
Optional Coverages
BOP policies can be tailored with optional coverages to fit specific business needs. Some common options include:
-
Outdoor Signs: Provides coverage for loss or damage to outdoor signs.
-
Money and Securities: Protects against the theft or loss of money and securities.
-
Employee Dishonesty: Covers losses from dishonest acts by employees.
-
Mechanical Breakdown: Covers damage to business equipment caused by sudden breakdowns.
BOP Limitations and Seasonal Adjustments
BOP includes several limitations on coverage. For example:
-
Seasonal Adjustments: Business personal property coverage increases automatically by 25% to accommodate seasonal fluctuations in inventory.
-
Inflation Guard: The BOP automatically increases building coverage to keep pace with inflation, protecting businesses from being underinsured as costs rise.
Frequently Asked Questions (FAQs)
1. What is covered under a Businessowners Policy (BOP)?
A BOP covers property damage, business personal property, and loss of business income. Optional coverages can be added for specific needs like equipment breakdown or employee dishonesty.
2. Is there coverage for outdoor signs under a BOP?
Yes, outdoor signs can be covered if optional coverage is selected. Standard BOP policies typically do not cover outdoor signs unless they are attached to the building.
3. What types of businesses are eligible for a BOP?
Small to medium-sized businesses like retail stores, professional offices, and restaurants are commonly eligible. High-risk industries, like manufacturing, may need a more specialized policy.
4. Can BOP coverage be customized?
Yes, BOP offers customizable options with additional coverages such as business income from dependent properties, extra expense, and seasonal adjustments.
5. What property is excluded from BOP coverage?
BOP excludes vehicles, money, securities, and contraband. It also doesn’t cover losses from events like flooding, earthquakes, and pollution unless specific coverage extensions are added.
6. How does BOP handle seasonal variations in inventory?
BOP automatically increases business personal property coverage by 25% during seasonal periods when inventory values are typically higher.
7. What is the difference between named perils and open perils coverage?
Named perils coverage lists specific risks that are covered, while open perils coverage includes all risks unless specifically excluded by the policy.
Conclusion
A Businessowners Policy (BOP) is one of the best options for small and medium-sized businesses seeking affordable, customizable insurance coverage. It bundles essential property coverage with the flexibility to add optional protections based on your business’s unique needs.
With its broad coverage for property, business income, and business personal property, combined with optional add-ons like outdoor signs and equipment breakdown, BOP offers comprehensive protection that evolves with your business. Whether you’re a retailer, restaurant owner, or professional service provider, BOP can ensure you’re protected against the risks that could threaten your livelihood.
Get Expert Help with Your Businessowners Policy (BOP)
At Vantage Point Risk, we specialize in helping small and medium-sized businesses get the most out of their insurance coverage. Our experts can guide you through the process of selecting the best Businessowners Policy (BOP) for your unique needs, ensuring that your business is fully protected.
Contact us today to learn more:
📞 Phone: 541-681-8793
📧 Email:
🌐 Website: www.vantagepointrisk.com
