A business owner’s policy is an insurance coverage bundle that includes protection from property and liability risks. This policy is attractive for some businesses because even though it provides the same coverage as individual policies combined, the premium for a business owner’s policy is usually cheaper than the separate policies' total cost.
A business owner’s policy is more cost-effective than getting several individual policies offering the same coverages. Although a BOP is geared towards small and medium businesses, most insurance providers require businesses to meet a set of eligibility criteria before a business can qualify for a BOP.
Here are some requirements that insurance providers often require from businesses:
- Number of Employees – A business should have fewer than 100 employees to become eligible for a BOP. It might be possible for a business to get approved if the number of employees is slightly above 100. Still, it will depend on the insurance provider and the business's financial health. 9
- Size of Location – A business should only have a small office, commercial space, or workplace.
- Revenue – the business should be earning no more than $1 million annually. Some insurance providers consider companies that make less than $5 million per year as eligible for a business owner’s policy.
- Business Interruption Insurance – A business needs to have less than one year of business interruption insurance, which protects a business from lost income in case it stops operations due to unexpected events such as fire, prolonged power outages, or physical damages. This type of coverage also kicks in when a business temporarily closes down to repair or rebuild a facility after sustaining extensive damages.
- Risks – Although it differs per insurance provider, low-risk businesses are more likely to be eligible for a BOP. Inns, apartment buildings, and fitness centers are examples of low-risk businesses that often qualify for a BOP. In contrast, examples of high-risk businesses that might not qualify include banks, cinemas, restaurants, and bars.
A Business Owners Policy is an affordable insurance solution for small businesses, so business owners need to understand BOP and determine if their businesses are eligible. If you want to understand BOP and business insurance more, get in touch with Assured Standard today!