BUSINESSOWNERS POLICY (BOP) is a "homeowners" approach to packaging insurance for businesses. When an amount of insurance on building and/or contents is selected, it automatically includes a broad range of additional coverages for an indivisible package premium. For eligible risks, the policy provides an alternative to the commercial package policy (CPP). The BOP was designed for small- to medium-sized habitational, retail, wholesale, service and contracting risks. Eligibility begins with the classification list provided in the manual. Once it is established that the type of risk is eligible, the other criteria must be evaluated such as size, construction, and ineligible operations. Many carriers have their own criteria that may vary significantly from the standardized criteria.

For smaller operations, a BOP is generally more desirable than a CPP due to pricing and automatically included coverages. Some of the automatic coverages included are debris removal, automatic increase in building insurance, seasonal automatic increase, personal property off premises, business income and extra expense. Property is written at replacement cost valuation provided the limit carried is at least 80% to value at the time of the loss. Business personal property is covered at 125% of the limit of insurance when that limit is equal to 100% of the 12-month average business personal property value. One of the most valuable automatic coverages is business income and extra expense that is issued without a limit and subject to only on the actual loss sustained for a period of up to 12 months.
(Use ACORD Form #160)
Related PF&M Articles:
ISO Businessowners Program Overview
AAIS Businessowners Program Overview
MSO Businessowners Program Overview