Can You Package Your Policies Into a Business Owner's Policy (BOP)?

Often, yes. If the business you bought is small and lower hazard and mainly needs property, business income and general liability coverage, many carriers will consider one business owner's policy (BOP), subject to their eligibility rules. That can mean less paperwork and sometimes less premium. A BOP does not replace workers' compensation, commercial auto for owned vehicles or professional liability. A business too large or too hazardous for a carrier's BOP program needs separate policies or a larger package. This guide is for new owners who inherited a stack of separate policies and want to know whether a package fits.

What does a business owner's policy include, and what does it leave out?

A BOP packages the coverages most small businesses need on their own premises into one policy, usually with one deductible structure and one renewal date. The Insurance Information Institute describes it as combining property, business interruption and liability coverage for small and mid-sized businesses. Carrier BOPs vary, so treat this table as a general guide and read the forms on any quote.

For more detail, see what a business owner's policy covers and does a BOP include workers' comp.

Is the business you bought eligible for a BOP?

Eligibility is set by each carrier's program, not by a universal rule. Insurance Services Office (ISO), which publishes standard forms and rules many carriers use, has BOP rules with size limits per location, and many carriers write their own BOPs with different limits. In general, carriers look at:

• Size: square footage and revenue per location, and sometimes payroll.
• Class of business: offices, many retailers and light service businesses fit well. Contractors, manufacturers, restaurants and businesses with significant off-site work often face extra rules or are written elsewhere.
• Operations: work done at customers' sites, use of subcontractors, products sold, and any professional services.
• The building: age, construction, fire protection and occupancy.
• Loss history: recent claims on property and liability.

Three points are specific to acquisitions. First, if the seller had a BOP and you bought the assets, that policy generally cannot be handed to your new company without the carrier's written consent. Your company needs its own coverage from closing; see keep the seller's insurance or start over. Second, the seller's business may have outgrown a BOP since anyone last looked, or the opposite: a business that was once larger may now fit. Third, add-ons change the picture. A holding company that combines several companies may exceed a carrier's BOP limits per location or need a single program across entities. See one insurance program vs separate policies.

When does a BOP beat separate policies?

Price matters, but compare it only after the coverage matches; for general pricing context, see what a BOP costs. A commercial package policy combines separate coverage parts, such as property and general liability, under one policy, with more room to customize than a BOP. Use this decision guide to choose.

See BOP vs commercial package policy and BOP vs general liability.

What could you lose by moving into a BOP?

Packaging can quietly narrow coverage if you compare only the headline limits. Before switching, check:

• Limits. BOP programs often cap liability and property limits. An umbrella can add liability limits, but the umbrella carrier's underlying requirements must line up. A commercial umbrella usually does not sit over professional liability, cyber or employment practices coverage.
• Property terms. Separate property policies sometimes carry agreed value, blanket limits or other options a BOP program may not offer. Flood and earthquake are usually excluded from a BOP; if the current property policy carries them by endorsement, confirm the BOP can match them or arrange a separate policy.
• Business income. Compare how long income is covered, the waiting period and the extended period.
• Liability exclusions. BOP liability sections commonly exclude professional services, auto and employment practices.
• Claims-made history. If an endorsement on the BOP replaces a standalone claims-made policy, such as employment practices or cyber, keep the retroactive date (the earliest date of acts the policy covers) continuous. See duplicate and overlapping coverage.
• Concentration. With one carrier writing all core coverages, a nonrenewal means remarketing everything at once.
• Future add-ons. If you plan more acquisitions, ask how the BOP handles a newly acquired company. ISO offers a newly acquired organizations endorsement for BOPs, but it lasts at most 90 days and does not apply to an acquired LLC, partnership or joint venture; carrier programs vary. See adding a newly acquired company to your policies.

How do you switch to a BOP without a gap?

1. Gather the current declarations pages, the list of forms and endorsements, property values and loss runs.
2. Ask for a BOP quote that matches or improves current terms, line by line, and list anything the BOP will not cover.
3. Compare side by side: limits, deductibles, business income terms, exclusions and endorsements, then price.
4. Check requirements in the loan agreement, lease and key customer contracts. For most Small Business Administration (SBA) 7(a) loans over $50,000, Standard Operating Procedure (SOP) 50 10 8.1 calls for collateral insured for full replacement cost with the lender protected by the right clause; see SBA lender insurance requirements.
5. Bind the BOP effective the moment the old policies end. A quote is not coverage until the carrier binds it.
6. Cancel or non-renew the old policies. Switching at renewal avoids a mid-term cancellation, where the refund can be less than a straight share of the unused premium.
7. Update certificates for customers, landlords and lenders.

A hypothetical example. A buyer acquires the stock of a small business-to-business services firm with one leased office and $300,000 of furniture, computers and equipment, so the company's own policies stay in force after closing. The company carried a property policy and a general liability policy with two carriers, renewing four months apart, for an illustrative $9,000 a year combined. At the general liability renewal, a BOP quote matching the liability limits and property values comes in at $7,500. It covers business income for a shorter period than the old property policy, so the buyer asks for a longer period, and the price rises to $7,900. The firm keeps its separate professional liability and workers' comp policies. The buyer binds the BOP to start when the general liability policy expires and asks the property carrier to cancel on the same date, accepting a small cancellation adjustment to get one renewal date. The numbers are illustrative.

What should you ask before packaging?

• Does the business fit this carrier's BOP program today, and after planned add-ons?
• What are the maximum liability and property limits, and will our umbrella sit over this BOP?
• Which current coverages or endorsements will not carry over?
• How does business income work: period, waiting period, extended period?
• Are additional insured, waiver and lender endorsements available on the terms our contracts require?
• How does the policy treat a newly acquired company?
• What happens to claims-made coverage we are folding in?

A Morrow review can compare a BOP quote with your current policies line by line; any terms depend on carrier underwriting.

For the bigger savings picture, see lowering premium without cutting coverage.

Keep reading

• One Insurance Program vs Separate Policies per Company
• Duplicate and Overlapping Coverage: What to Drop and What to Keep
• 12 Ways to Lower Premium After an Acquisition Without Cutting Coverage
• New Owner Review: Commercial Property
• New Owner Review: General Liability
• All guides for new business owners

Frequently asked questions

Does a business owner's policy include workers' comp?

No. Workers' compensation is always a separate policy, or in North Dakota, Ohio, Washington and Wyoming, coverage bought from the state fund. Commercial auto and professional liability are also outside a BOP by default.

Can a contractor get a BOP?

Sometimes. Some carriers write BOPs for smaller trade contractors, often with limits on revenue, payroll, subcontracted work and types of jobs. Larger contractors or those doing higher-hazard work usually need separate policies or a commercial package policy.

Is a BOP the same as a commercial package policy?

No. A BOP is a prepackaged policy for smaller businesses with fixed coverage parts and limited options. A commercial package policy combines separate coverage parts under one policy and is easier to customize for larger or more complex businesses.

Can I put an umbrella over a BOP?

Usually, if the umbrella carrier accepts the BOP's liability limits as underlying coverage. An umbrella generally sits over general liability, auto and employers liability, not over professional liability, cyber or employment practices coverage.

Will a BOP cover the company I just bought and companies I add later?

Only the companies named on the policy, plus any newly acquired companies the policy's wording covers. Some BOPs add newly acquired organization coverage by endorsement, but the standard version lasts at most 90 days and does not cover an acquired LLC, partnership or joint venture. Add each company you buy as a named insured promptly.

References

• Insurance Information Institute: What does a business owners policy cover?
• ISO: Businessowners Newly Acquired Organizations endorsement BP 04 54 01 06 (carrier-hosted copy)

This article is general information, not legal, tax or financial advice, and not a coverage determination. Coverage depends on the actual policy wording, carrier underwriting, your purchase agreement and your contracts. Ask your attorney and accountant about deal and legal questions.