A business owner’s policy (BOP) combines general liability insurance with commercial property insurance, often at a discount. It covers broken or stolen laptops and other equipment, client lawsuits, and more.
Accusations of brand infringement or libel
Example: A fire at a digital marketing agency destroys the company’s computers and office furniture. The agency’s BOP pays for replacement of the destroyed items so it can quickly get back on its feet.
If a client or competitor accuses your business of copyright or brand infringement, a business owner’s policy can cover the cost of a lawsuit. A BOP also pays for lawsuits related to claims of spoken defamation (slander), written defamation (libel), invasion of privacy, and other advertising injuries.
Example: One of the employees at your web hosting company makes a derogatory comment about another web hosting company on your business’s social media account. When the competitor sues, your BOP helps cover the cost of hiring a lawyer, as well as the eventual settlement.
The general liability insurance included in a BOP covers the most common third-party accidents and lawsuits. That includes client slip-and-fall injuries at your office, accidental damage to client property, and other lawsuits stemming from injuries and property damage.
Example: A client trips on an uneven front step at an IT consulting agency and suffers a concussion. The client sues the agency to recoup the cost of the medical bills. The agency’s BOP covers the legal expenses, including a court-ordered judgment.
The commercial property insurance included in a BOP covers the cost of repairing or replacing your business property after it’s stolen or damaged.
Example: A thief breaks into a software development business and makes off with thousands of dollars’ worth of computers, monitors, and other electronics. The business’s BOP covers the cost of replacing the stolen items.
Client payment recovery
Although a business owner’s policy doesn’t cover technical mistakes and oversights, another policy provides this coverage. Errors and omissions insurance, also called professional liability insurance, covers lawsuits over professional mistakes, including coding errors and missed deadlines.
Example: A project manager misses a deadline for a large-scale IT project and the client sues. An errors and omissions policy would help pay expenses related to the lawsuit, including the cost of hiring an attorney and a court-ordered judgment.
A BOP covers third-party injuries, but not employee injuries. Workers' compensation insurance covers medical expenses when an employee suffers a work injury. It also pays the employee part of the wages lost during recovery.
Example: An employee at an IT staffing agency trips over a loose rug in the office and breaks a leg. The agency’s workers’ compensation policy covers the cost of the resulting medical bills, as well as part of the wages lost while the employee was unable to work.
Example: A cyberattack at a database administration company exposes the credit card numbers of dozens of clients. The company’s tech E&O policy covers the cost of notifying the affected clients and supplying them with fraud monitoring services for one year following the breach.
Though a BOP protects your business property, the coverage does not extend to vehicles. Commercial auto insurance is required in almost every state for business-owned vehicles. Personal, rented, and leased vehicles used for business purposes should be covered by hired and non-owned auto insurance, as well.
Example: A computer repair technician driving a company van is rear-ended by another driver on the way to a client’s office. The company’s commercial auto insurance pays for the damage to the vehicle. It would also cover legal costs if the other driver filed a lawsuit.
If your client records are destroyed by a fire or other incident, your business might need to work overtime to collect missing payments. Property insurance doesn't cover the cost of recovering these payments unless your policy has an accounts receivable endorsement.
Example: A vandal destroys a project management company's payment records. To collect outstanding payments, the business hires a temporary accounting professional – paid for by the accounts receivable endorsement on its property policy.
BOPs have some coverage exclusions. For example, a BOP doesn't usually pay for property damage caused by natural disasters like earthquakes, hurricanes, tornadoes, and floods. If you need insurance coverage for these events, you'll have to add endorsements to your policy.
Your BOP also won't pay for lawsuits involving willful negligence or purposeful copyright infringement – which can be criminal offenses. Intentional customer injury or property damage both fall into the same category and aren't covered by the policy.
You can add endorsements to your policy to fill some gaps in your coverage. Check with an TechInsurance agent to make sure your insurance includes the coverage you need.