Business Owner’s Policy Eligibility Requirements | TechInsurance (2024)

A business owner’s policy is a package that includes two commercial insurance policies: general liability insurance and commercial property insurance. It protects against the most common risks of running a small business.

Because of its broad coverage and lower price, insurance agents often recommend this policy. However, not all businesses are eligible.

Eligibility for a BOP primarily depends on how risky it is to insure your business. Small businesses in low-risk industries have the best chance of getting approved because there’s less likelihood for claims.

If your business meets the following requirements, it is probably eligible for a BOP:

• Employs less than 100 people
• Has a small office or commercial space
• Brings in less than $1 million in annual revenue
• Needs less than one year of business interruption insurance

If your business has more than 100 employees, you likely don’t meet business owner’s policy qualifications. Depending on your company’s annual revenue, you might be able to get approved if your payroll is slightly over 100. However, most companies this size would need to purchase these policies separately.

Examples of low-risk industries include:

• Software development
• Computer repair and service
• IT consulting
• IT staffing
• Project management

Companies in low-risk industries will also pay less for their business owner’s policy than high-risk businesses.

The leasing company that owns your office space may require your business to have general liability insurance, or a client may include liability protection in the terms of a contract. If your business owns a building or expensive equipment, you should also consider getting commercial property coverage.

If your company meets business owner’s policy qualifications, it’s a good idea to purchase a policy. Even when it's not required, every small business benefits from business owner's policy's protection against common business losses and lawsuits.

Having a BOP is important because it can save you a significant amount of money in the long run. If your business has to file a claim, insurance will help you cover the expenses. Depending on your deductible and coverage limits, a claim that might otherwise cost thousands could cost only a few hundred dollars.

Without insurance, you would have to pay for the losses entirely out-of-pocket. Having just one costly claim could put an uninsured business in debt. If your company meets the business owner's policy requirements, it’s a smart investment for the future.

Business owner’s policies have limits, which is the maximum amount of money the insurance company will pay towards a covered loss. Most BOPs have low coverage limits, which is why they are suitable for small businesses with minimal risk. When you buy a policy, you get to set your coverage limits based on your needs.

Make sure your general liability insurance can cover the cost of a lawsuit, such as attorney's fees and court expenses. For commercial property insurance, set your limit to match the total value of your business’s property. That way, you can replace everything if it gets damaged or lost.

Business interruption insurance is included with most commercial property policies. It protects against unexpected business closure and business income loss. For example, if your IT staffing agency lost all of its computers in a fire, business interruption insurance would reimburse the business for loss of income while the equipment was getting replaced.

However, you can’t rely on business interruption insurance to fund your business for an indefinite amount of time. Business interruption coverage can be used from the date of the loss until business operations can resume. For BOP eligibility, small businesses usually need less than one year of business interruption insurance to get approved.

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