Restaurant customers often order a combo meal, since it has everything most people need—entree, side and drink. Packaging a burger, fries and a soda into a combo meal makes a lot of sense, and it’s similar to how a Business Owners Policy (BOP) works in insurance.
A BOP makes it easy to get the standard coverage and limits you need without piecing together separate property and liability coverage. But like your favorite combo, a BOP isn’t everything on the menu, so it’s important to know what a BOP does and doesn’t cover.
Knowing who needs a BOP, what advantages a BOP package offers and what a BOP covers will empower you to know if this is the right insurance combo for your business.
What Is Covered by a BOP?
A BOP insurance package offers several types of insurance rolled into one. Most BOPs include policy coverage for:
- Property Insurance: This is coverage for your business’s buildings and contents against damage and theft. This coverage applies whether you lease, rent or own your building. It also applies to additions, in-progress additions and outdoor fixtures.
BOP property coverage also takes care of the contents of your buildings, such as physical inventory, furniture, equipment, vehicles, cash or digital assets such as customer data. A standard BOP will cover named perils, such as fire, wind, hail, vandalism and theft. Special BOP coverage is available for a broader or all-risk coverage.
- Business Interruption Insurance: This is coverage that can help protect your business in the event of a fire or other serious catastrophe that interrupts the operations of your business. Fires and other disasters can be devastating and many businesses that experience them never reopen.
Business Interruption Insurance can cover the loss of income resulting from a business interruption and help with other related expenses, such as operating out of a temporary location, which can help you get back on your feet faster.
- General Liability Insurance: This is coverage to cover your business’s legal responsibility for damages it may cause to others, because of things you or your employees do or fail to do as part of business operations.
General Liability includes coverage for medical bills for a customer’s accident or injury as well as damage that happens to a customer’s property. Coverage also extends to cover certain legal fees, court costs and judgements or settlements resulting from damages your business is claimed to have caused others.
BOPs can offer other additional insurance as an easy add-on. In sum, this combo of policies can protect your business from a wide range of risks typical of your industry.
What Is Not Covered by a BOP?
A BOP is a package of the most common and useful policy coverage in your industry, but it’s not everything on the menu. For some businesses, a BOP may be all you need. But many restaurant businesses will need additional protection, as most BOPs do not include the following policies:
- Workers’ Compensation: This is coverage required by law in most locations to protect your business and employees from workplace accidents. If you have employees, you likely need this coverage.
- Employment Practices Liability: This is coverage to protect against claims of workplace discrimination and harassment. If you have employees, you may need this coverage to protect against the risks of hiring, firing and employing workers.
- Commercial Auto: This is separate coverage available to protect your company vehicles and drivers from accidents and injuries. If your business owns one or more vehicles, you may need this coverage.
- Cyber Liability: This is coverage to protect against the threat of cyber attacks, hacks, stolen data and damaged computer systems. If your customer or financial data is at risk, you may need this coverage.
Who Needs BOP Insurance?
While not all businesses need the kind of packaged coverage a BOP offers, many do. In general, your business needs BOP insurance if your business:
- Is a small- to medium-sized business. If your business has risks typical of others in your industry and doesn’t face unusual exposures, a BOP is likely a good fit for you.
- Maintains a physical address. If you lease, rent or own a space for any part of your business operations, it’s important to have BOP coverage for your property and assets.
- Has assets at risk of damage or theft. If you have physical inventory, furniture, equipment, vehicles, cash or digital assets such as customer data, you may need a BOP.
- Faces the chance of being sued. If there is a possibility your business could be sued over customer accidents or injuries, you should consider the liability protection a BOP can offer.
What Is the Advantage of a BOP Package?
A BOP insurance package offers several advantages for restaurant businesses like yours.
Convenience: A BOP is a convenient way of buying insurance. Getting coverage for your business can be confusing and stressful enough without having to pick out all the right coverage à la carte.
Cost savings: A BOP can save most people money on their coverage. That’s because the package is designed so that coverage don’t overlap, eliminating the likelihood that you will pay for the same thing twice.
Broad protection: A BOP can help ensure you have all the standard coverage you need. You won’t be risking coverage gaps and exposures that are possible when you combine generalized standalone policies.
Industry specific: A BOP is often a better choice for small- and medium-sized businesses in a particular industry. Every industry has unique risks that a BOP policy is specifically designed to protect against.
A BOP is consistently one of the most popular insurance policies available for restaurant businesses. It’s a quick and easy way to get the standard industry coverage and limits your business needs in one convenient package. For businesses with property and liability risks, it’s the smart choice. While a BOP combo doesn’t include all the insurance products you may need, it’s a great starting point for key property, liability and business interruption coverage.
If you have questions about your Business Owners Policy or other insurance needs, our client solutions team is always here to help.