What Is A BOP Policy? 2022 Edition
You may be looking for business insurance or speaking with insurance brokers and keep hearing the term BOP policy.
The insurance industry often uses acronyms and other abbreviations so commonly that we think everyone knows what these terms mean.
A BOP is an acronym for Business Owners Policy, and most insurance companies use this policy form to insure many types of small businesses.
In fact, in recent years the size of firms eligible to be insured on a BOP has grown to larger firms in a broader array of industries.
So what is a BOP?
A BOP is a package type policy – and I use the word package because the BOP packages or combines property insurance coverages with liability coverages to create the foundation or core of the policy.
To this core, most insurers added a variety of what I call fringe coverages most commonly needed by business owners – crime coverage, property extensions, liability extensions, etc.
The advantage of a BOP policy is that it is flexible and comprehensive and competitively priced to make it an easy choice for most business owners to ensure their most common exposures.
But, not all BOP policies are created equal.
Every insurer’s policy form is different from the next and even with the same insurance company, you can have different levels of fringe coverage is sort of a good, better, best type setup.
Recently a client said that they had a better offer from a competing broker on their BOP policy, but wasn’t sure it was of equal or greater value so they asked me if I could review the competing proposal and see how it stacked up to our existing policy.
I was grateful that the client trusted me to perform this review and didn’t just make the switch to the cheaper alternative.
When we reviewed the policies it was clearly an apples and oranges comparison.
The cheaper BOP was quoted with lower property and liability limits than we had on our policy, and the sublimity of coverage – what I’ve called fringe coverages for many critical options was anywhere from one-fifth of what we provided to less than half what we provided.
And that’s the rub.
Most business owners don’t know what to look for in an insurance proposal so they only see the lower price and think
” hey! this is a good deal”, when in fact the deal may be really inferior to what they already have.
So, while a BOP policy is a convenient form of business insurance, they are not all created equal so careful consideration must be given to the limits and sub-limits of protection offered by the policy.
In addition, it usually takes the eye of a skilled broker to help build out the options and limits needed by a business owner to maximize the coverages and where needed to supplement the BOP policy with other coverage forms where shortfalls may exist.
The moral to the story is that your business is the engine that fuels your lifestyle, your income, and your net worth.
Protecting it should be of paramount importance.
That doesn’t mean it needs to be difficult or complicated – but it does mean that working with an expert is in your best interest.
If that’s what you’re looking for when it comes to protecting your business and livelihood, then let’s connect.