Business owners need to take care of a variety of risks. It includes the risks to personal injury, third-party liabilities, and damage to own property due to man-made and natural disasters. To cover these risks, they often get multiple insurance policies for their business. These risks can be covered simply by getting one business owner’s policy. As per business owner policy definition,  it is an insurance that combines the benefits and coverage of business liability and property insurance into one standard comprehensive policy.

What is a Business Owner Policy?

A business owner’s policy (BOP) includes multiple coverages like commercial property insurance, general liability insurance, and business income cover. The general liability insurance is for covering the risks associated with physical injuries and property damages inflicted to a third-party within the business premises. The business income cover includes the financial loss coverage for business interruptions. A commercial property insurance policy covers the own property damage cover due to man-made and natural calamities. A comprehensive BOP insurance may also include an additional coverage for thefts, forgery, frauds, and other risks. 

Why should we get a Business Owner’s Policy (BOP) Insurance?

A general liability insurance policy provides coverage to only third-party liabilities. It does not include protection to own property and also does not reimburse the medical costs for injuries of employees. On the other hand, a commercial property insurance policy protects the property but does not include coverage for third-party liabilities. A business owner’s policy combines the benefits of both these insurance policies. It also includes coverage for business interruption which is usually included in a comprehensive commercial or business property insurance. As a result, it negates the need of availing multiple policies separately. 

A business owner’s policy saves the cost of getting multiple policies for your business. It also extends the coverage for business risks like burglary, housebreaking, thefts, vandalism, etc. The cost of covering third-party liabilities or self-property damages due to earthquakes, floods, lightning, and other disasters can put your business into a serious debt trap. Small businesses often go bankrupt due to heavy losses due to damages. This can be prevented by getting a business owner’s insurance policy. 

Key Features of Business Owner’s Policy (BOP) Insurance

  1. Coverage for business interruption: A natural disaster can damage your business property and interrupt the regular business operations. The loss of income due to business interruption can result in heavy losses for your business. The coverage for business interruption also includes the rent and other costs involved in moving your business to a temporary location. 
  1. An extensive coverage for property: The commercial property insurance coverage offered by BOP extends protection to business property, equipment, furniture and fixtures, inventory, and business documents. It also includes protection to your business property from vandalism, riots, earthquakes, floods, fire, explosion, thefts, and more. 
  1. Coverage for third-party liabilities: A third-party can file a lawsuit against your business for bodily injuries or property damages. These injuries/damages might be caused due to your products or during the regular operations of your business. A business owner’s insurance policy includes a complete cover for different types of third-party liabilities. It also includes coverage for reputation damage, advertising injury, copyright claims, and other financial losses inflicted due to third-party claims. 
  1. Add-on coverage: A business owner’s policy can be customised to fit-in your business requirements. For instance, if you run an e-commerce store or collect important business data through your website, it may be sensible to buy a business owner’s policy insurance with data-breach coverage. 

Characteristics of Business Owner’s Policy (BOP) Insurance

  1. Who is eligible for a business owner’s policy? : The exact requirements for a business to qualify for a business owner policy vary from one policy to another. A business owner’s policy is typically meant for small businesses that have an annual turnover of less than Rs. 1 crore. The business owner should have less than 100 employees to be eligible as per the business owner policy requirements
  1. Policy limits: Business owner policy coverage comes with policy limits. The policy limit should match the value of your property because it will be the maximum sum insured you will get for property damages. Due to policy limits, a business owner’s policy is only suitable for small businesses. 
  1. Add extensions: As a business owner, you might have to add extensions to your business owner policy coverage to make it suitable as per your specific requirements. For example, if you own a restaurant, you may need a liquor liability cover to stay protected from the damages caused due to intoxicated customers. 
  1. Flexible: A business owner’s policy is known for its flexibility as you can modify the sum insurance and policy coverage as per your business requirements. It is compatible with a wide range of add-on covers and offers complete insurance for most business types. 

Types of Business Owner’s Policy (BOP) Insurance

Some types of BOP insurance classified upon the business type are mentioned below:

  1. Petrol Pump Insurance: This type of business insurance is specially designed to protect the property and assets of petrol pump owners. It includes a third-party liability cover along with protection against fire, natural disasters, and other perils. 
  1. Restaurant Insurance: A restaurant insurance policy is designed for restaurant owners to protect them from financial risks due to thefts, riots, burglary, fire, and acts of god. It also includes public liability cover, loss of money in transit cover, and other benefits. 
  1. Comprehensive Liability Insurance: This type of insurance is offered to businesses that need comprehensive general liability insurance. Along with a third-party liability cover, this insurance policy also provides coverage for damages due to products, personal injury cover, fire damage cover, and more. Business owners who want coverage against a broad range of liabilities can get it. 

Business Owner’s Policy (BOP) Insurance Available in India 

Policy Name Sum InsuredPolicy Period Key Features
Office Package Policy by ICICI Lombard As per coverage needs and business requirements1 year Includes protection from fire, acts of god, and other perils. 
Comes with a public liability cover and employer’s liability cover. 
Critical care insurance cover is available to cover the medical expenses of the employees. 
Specifically designed for IT businesses. 
Business Guard Commercial Package Policy by TATA AIGAs per coverage needs and business requirements1 year Includes asset protection cover, public liability cover, employer’s liability, workmen’s compensation, and other benefits. 
Optional cover for burglary, equipment breakdown, material damage, etc. is included in this business owner policy coverage
Includes loss of money in transit cover. 
Provides a complete suite of insurance covers to fulfil your specific business requirements. 
Business Guard by Axis BankAs per coverage needs and business requirements1 year Insurance policy can be customised as per your business type and needs.
Material damage, business interruption, personal accident, workmen’s compensation, public liability, and much more can be covered under a single comprehensive policy. 
Ideal insurance plan for SMEs (Small and Medium-Sized Enterprises).

Inclusions & Exclusions For Business Owner’s Policy (BOP) Insurance

What’s covered?

  • Property damages due to acts of vandalism, drastic weather conditions, burglary, theft, or accidents are covered under this policy. It covers the damages to furniture, inventory, and any other business property that gets damaged during the business operations. 
  • Business owner policy coverage includes protection to the rented or leased property to cover the property damage claims filed by the landlord. 
  • Claims filed by a third-party for bodily injuries, personal injury, and property damages are covered under this policy. The medical expenses incurred due to physical or mental injuries to a third-party are also covered under it. 
  • The interruption or loss of income caused due to a disaster, theft, or vandalism is covered under the business owner policy coverage. It also covers the losses that are caused due to slowing down of business operations after an accident. 
  • The legal expenses incurred in defending defamation, copyright infringement, and reputational injury cases are covered under this policy. It also includes coverage for the lawsuits filed by the competitors due to the advertisements that affect their business. 

What’s not covered?

  • The business owner’s policy does not cover worker’s compensation i.e. coverage for the illnesses or injuries sustained by workers while completing the work.
  • Property damages caused due to negligence, breach of contracts, etc. are not covered by this insurance. It is to be covered under professional indemnity insurance. 
  • The vehicle accidents that occur while driving for business purposes are not covered under BOP insurance. 
  • The claims raised by the employees against racism, gender-bias, and other forms of workplace discrimination are not covered under this policy. 
  • The damages caused by a person who is under influence of alcohol or drugs are not covered under BOP insurance. 
  • Damages caused to machinery or equipment due to sudden breakdown or gradual wear are not covered under business owner policy coverage
  • Damages or financial losses incurred due to virus attacks, data breaches, hacking, and other related issues are not included in the business owner’s policy insurance

Who should get a Business Owner’s Policy (BOP) Insurance?

Businesses located in high-risk locations i.e. the locations that are prone to natural or man-made disasters can get BOP insurance. The companies that need to store expensive inventory, cash, and products should also get this type of insurance. The type of businesses that stand a higher risk of lawsuits can also get it to stay financially protected. 

For example, a business that sells life saving kits stands at a higher risk of liabilities filed by their customers. They must get a business owner’s insurance policy to remain secure from the liabilities caused due to their products or services. Shops and offices that run from physical locations must get it to cover incidents like fire, explosions, thefts, burglary, and housebreaking. 

Businesses like advertising companies, digital marketing agencies, etc. should also get it to stay protected from third-party claims due to copyright infringement and reputational damage due to misleading ads. For example, you say something about a business in a public interview and they file a defamation lawsuit against you. In this case, BOP insurance will cover the legal expenses incurred to defend your case in the court. Typically, these types of companies get a business owner’s policy:

  • Restaurants 
  • Wholesalers 
  • Manufacturers 
  • Food and beverages companies
  • Non-profit organisations
  • Insurance companies
  • Healthcare organisations
  • Construction companies 
  • Any small business that runs a physical store

Things to consider while getting a business owner’s policy

  1. Evaluate all the business risks: Before getting a business owner’s policy, you must evaluate all the risks that your business is exposed to. It will help you to decide the coverage requirements and sum insured. Also, it will help include specific requirements of your business. Suppose that you run a healthcare company and store the sensitive health records of your customers on your website. In this case, it would be sensible to get a cyber risk insurance policy along with BOP insurance. 
  1. Compare multiple policy quotes: It is possible to get insurance policy quotes from different insurance companies without spending anything. You should compare the quotes of several insurers before buying BOP insurance for your business. You may also speak with insurance agents to get the best insurance policy as per your specific business needs. 
  1. Re-evaluate the risks frequently: As your business grows, it can be exposed to different types of risks and liabilities. As a result, you must re-evaluate your liabilities and risks frequently to cover all your requirements. 

How to claim Business Owner’s Policy?

The following steps can be followed while claiming for a business owner’s insurance policy:

Step 1: Inform the insurer

Inform the insurer immediately after receiving any notice or claim letter from the client. If any of your clients, vendors, and other third-party individuals suffer from property damage or injury at your site, you should report the incidents to the insurer at once. After reporting the incidents, the insurer will ask for your policy details like name of the policyholder, policy number, etc. after that, they will ask you to file an application form. 

Step 2: Fill the claim application 

The claim application form should contain all the details of the incidents. You should also attach the claim letter of the client and other supporting documents that verify your claim. 

Step 3: Cooperate with the surveyor 

The insurer will appoint a surveyor who will inspect the site for evaluating the nature and extent of damages. Cooperate with the surveyor completely and help him create a detailed inspection report in your favour. It may require a few days to complete the claim settlement procedures and formalities. Be patient and extend your full support to the insurer during this period. 

Documents required to support the claim

  • Claim application form (duly filled)
  • Copy of FIR report (for thefts and other events)
  • Photographs of the incident/injury 
  • Evidence proofs 
  • Property evaluation report from a third-party (in case of property damages)


Is business owner’s insurance required by law?

A business owner’s insurance policy includes commercial property and general liability insurance. It is not mandatory for businesses to get any of these insurances. Yet, most businesses you work with may require you to get general liability insurance before signing a contract with them. A general liability coverage may also be required to get certain types of professional licences. For example, a food and beverages company may need it to get a food certification licence from the government. If you rent/lease a property to run your business operations, the landlord may ask you to get a commercial property insurance policy before signing the lease/rent agreement. Due to all these things, it is better to get a business owner’s policy for your business.

How much BOP coverage is required?

The sum insured or BOP coverage required for your business depends on many factors. Some of the key factors are business location, business type, size of your business, number of workers, and the kind of clients/customers you deal with on a daily basis. If the risks are greater, you must opt for BOP insurance with a higher coverage.

Does BOP insurance cover social media risks?

BOP insurance includes advertising injury coverage. This coverage provides protection from slander, copyright infringement, privacy invasion, libel, and other third-party liabilities. As a result, if you say something through a social media post or interview that affects your competitors and they file a lawsuit against you, the BOP insurance has got you covered.

What are the basic differences between professional liability and business owner’s insurance policy?

A professional liability insurance policy covers the third-party claims filed by your clients or customers. It covers the cases where they suffer from a bodily injury or property damages due to your services/products. A business owner’s insurance policy also includes general liability insurance to protect you from third-party claims. However, it also includes commercial property insurance that provides protection to your own business property and physical assets. It also covers the losses due to business interruptions by default which is not the case with professional liability insurance. A professional liability insurance policy is more suited for architects, lawyers, doctors, and other professionals whereas BOP insurance suits all kinds of small businesses.

Are general liability insurance and BOP insurance the same?

General liability insurance provides extensive coverage from third-party liabilities. A business owner’s insurance policy includes general liability insurance. It also includes commercial property insurance and business interruptions cover. A general liability insurance policy only covers third-party liabilities whereas BOP insurance provides coverage for own property damages as well. As a result, its scope is much wider than regular general liability insurance.

What is worker’s compensation insurance? Is it included in BOP?

A worker’s compensation insurance policy provides medical expenses coverage for the bodily injuries caused to your employees or workers. A general liability insurance policy only covers the third-party liabilities. Therefore, BOP insurance does not include cover for the workers. Yet, you can get worker’s compensation insurance as an add-on with the BOP insurance. Some regions where you conduct business may require you to get worker’s compensation insurance to cover the illnesses and physical injuries of workers.

Which are the popular add-on covers to be availed with BOP?

The business owner’s policy insurance may not cover all the risks that your business is exposed to. Some of the popular add-on covers to be availed with a business owner’s policy are listed below:

Cyber liability cover: It protects your business from data breaches, cyber attacks, and damages to computers and data. 

Rented vehicles cover: It provides coverage for the vehicles that you have leased, hired, or borrowed for your business. 

Accounts receivable cover: It provides coverage for the pending client invoices that were not cleared due to bankruptcy, insolvency, and related issues.

Which factors are considered by an insurance company before determining the policy premium?

The business owner policy insurance cost varies as per these factors:

Business location
Business size
Value of the insured property 
Employee size of the company 
Claims history of the insured
Coverage amount demanded by the insured
Business type or industry 
Deductible chosen by the insured

Which businesses should opt for business owner’s policy insurance?

The businesses that face legal liabilities frequently due to third-party injuries or property damages must get a business owner’s policy. The businesses that have precious physical assets that can be easily damaged or stolen must also get it to stay protected from potential financial losses. The businesses that cannot withstand interruptions must also get it.

Which insurances are not covered under BOP?

The business owner policy coverage does not include these insurances or covers:

Commercial auto insurance
Health insurance for workers
Disability insurance for workers
Workers compensation insurance
Professional liability insurance

These insurances can either be purchased separately or as add-on policies.

What does a business owner policy cover?

The business owner policy coverage includes these covers:

General liability coverage for third-party claims
Commercial property coverage for own property, equipment, and inventory 
Loss of business income because of natural disasters or accident

Can I extend the business owner policy coverage of an existing policy?

The businesses keep on evolving with time. For example, a manufacturing company may extend its product line or employ more workers to increase production. Therefore, the existing business owner policy coverage may not be enough after a certain time. You can contact the insurer to increase or decrease the coverage amount as per your evolving business needs. You can also include some add-on covers to extend the benefits of your existing policy.

What are the consequences of cancelling a BOP insurance policy?

You can cancel the business owner’s policy insurance if you feel that you don’t need it anymore. However, cancelling the policy in the middle of the policy tenure has its consequences. The insurer may demand an additional premium if you need the coverage again in the future. Also, your business will be exposed to the third-party liabilities and other risks after cancelling the policy.

Does a business owner’s policy cover independent contractors?

Independent contractors and subcontractors are not covered in a business owner’s policy by default. Yet, you can add them to your policy as an insured on a temporary basis. It is better if the independent contractors get a separate general liability insurance for themselves. It will ensure that the contractor’s get enough coverage from the third-party liabilities levelled against them.

How to reduce the business owner policy insurance cost?

The following tips can be utilised to minimise the business owner policy insurance cost:

Choose the annual premium: Usually, insurers allow you to choose the monthly or annual premium packages. It is smarter to go for the annual premium because it comes with a higher discount. 

Manage the risks: Focus on imparting high-quality training to the employees to reduce on-site accidents and property damages. You can monitor the social media posts closely to avoid the ones that may affect or hamper the image or business of your competitors. Managing all these risks proactively will make you eligible for the no-claim benefits which usually includes the reduction in policy premium.

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