A business owner's policy (BOP) is a special type of commercial insurance designed for small and medium-sized businesses. A typical BOP policy includes property and liability insurance.

Why purchase this combined policy? Buying separate policies = higher cost. Like a lot of things you buy, bundling general liability insurance and property insurance into a single policy lowers your cost.

A few things to know about property insurance:

• The property insurance portion of a BOP is typically available as named-peril coverage, which covers damages caused by events specifically listed in the policy (fire, explosion, wind damage, vandalism, smoke damage, etc.).
• Some BOPs offer open-peril or “all-risk” coverage via a special form.
• BOP coverage usually includes buildings (owned or rented business premises, additions and additions in progress, outdoor fixtures) and personal business property (items owned by the business/business owner or owned by a third party but kept temporarily in the care, custody, or control of the business or business owner).
• Specific coverage in a BOP varies among insurance providers, but most have eligibility requirements.
• Many BOPs include business interruption coverage, providing up to 12 months of income for when a business is forced to shut down operations because of a covered property event.

Now some details on liability insurance:

• Liability insurance offers coverage for third parties who suffer bodily injury, property damage, advertising injury, or personal injury on your premises as a result of something you or your employees did or didn’t do.
• Coverage compensates you for legal fees related to third-party lawsuits (legal fees, settlements, and court costs) and possibly medical expenses that result from an injury to a third party.
• Most liability coverage providers offer optional additions or endorsements on business owner's policies for tailoring a policy to your specific needs.