Business owner’s policy for construction businesses

Q: Does a BOP cover employee injuries?

No , a BOP doesn’t cover employee injuries. Employee injuries are covered by workers’ compensation insurance.

Q: Can a contractor without a physical office get a BOP?

Yes . Some contractors without a traditional office can qualify for a BOP, depending on how their business operates and which properties needscoverage.

Why do construction businesses need BOP insurance coverage?

Construction businesses often face liability risks from job-site injuries and property risks from fire, theft or vandalism. A BOP covers the financial and legal risks of those potential liabilities and damages.

If a ladder falls onto a homeowner on a job site and they get injured, the general liability portion of a BOP would cover their injuries. If a fire, theft or vandalism damages your office or tools, the commercial property portion of a BOP would help cover repair or replacement costs.

“For small businesses, a BOP is like having a financial safety net. It covers many potential liabilities associated with running a business, such as someone getting hurt on the property and protecting against financial losses from damaged/stolen equipment,” says Andy Lea, chief insurance officer at Embroker, an online insurance broker. “Legal challenges or unexpected events can stop a business in its tracks – sometimes for good. A BOP can compensate for lost income and ongoing expenses, giving a business the breathing room to navigate through tough times.”

Construction businesses that commonly carry a BOP include:

General contractors
Residential and commercial builders
Roofers and paving contractors
Masons, carpenters and installation contractors

What does a BOP cover for construction businesses?

A standard BOP includes four core coverages to address common business risks.

Third-party bodily injury and property damage

A BOP’s general liability portion covers third-party claims for bodily injury and property damage. It will pay for another person’s medical expenses or property damage repairs, and it covers your business’s legal fees if you are sued.

Damage to business property

The commercial property portion of a BOP covers damage to physical business locations and business property from events like fires, theft, vandalism and accidental water damage. It covers items such as construction equipment, tools, computers and furniture.

Advertising injury

A BOP covers claims against your business related to advertising injury, including libel, slander and copyright infringement.

Lost business income

If your BOP policy includes business interruption insurance, it will help to replace lost income and ongoing expenses if your business shuts down after a covered loss.

What does a BOP not cover for construction businesses?

BOP insurance for construction businesses doesn’t cover everything. These are some losses that are excluded under this type of policy:

Employee injuries and lawsuits
Accidents in business-owned vehicles
Property damage caused by normal wear and tear
Property damage caused by floods or earthquakes
Intentional or criminal acts
Professional mistakes or oversights

How much does BOP insurance cost for a construction business?

The average cost of BOP insurance for construction businesses is $1,176 per year, or about $98 per month, according to Insureon. That’s about $359 cheaper than the average costs of a general liability policy and commercial property policy purchased separately.

Construction businesses typically pay more for BOP insurance than many other small businesses because they’re considered higher risk.

What determines your BOP premium?

BOP insurance premiums vary by business. Common pricing factors include:

Business location
Type of construction work performed
Value of buildings, tools, and equipment
Claims history
Coverage limits and deductibles
Number of employees

What additional insurance do construction businesses need beyond a BOP?

While many construction businesses can benefit from the broad protection of a BOP, there are other types of insurance that they may need, including:

Workers’ compensation: Workers’ compensation covers an employee’s medical bills and lost wages if they get sick or injured at work. This policy is required for most businesses with at least one employee.
Commercial auto insurance: Commercial auto insurance provides liability coverage for business-owned or leased vehicles or work trucks. It’s legally required in nearly every state.
Professional liability insurance: Professional liability insurance, also called errors & omissions (E&O) insurance, covers claims related to missed deadlines, negligence and breaches of contract that cause financial loss to a client.
Commercial umbrella insurance: Commercial umbrella insurance extends the coverage limits you have on other liability policies, like general liability and commercial auto insurance.
Builder's risk insurance: Builder’s risk insurance provides physical damage coverage for structures that are under construction. It also covers materials and equipment stolen from a job site.
Tools and equipment insurance: Tools and equipment insurance covers business property transported to and from job sites. It pays to replace items damaged by a covered peril or stolen.

Benefits and limitations of a BOP policy for construction businesses

Benefits of a BOP policy

Combines essential coverages at a lower cost than if purchased separately
Protects against financial losses resulting from common lawsuits
Covers damages to offices and business property
Can include business interruption coverage

Limitations of a BOP policy

Does not cover employee injuries
Does not cover business vehicles
Excludes some natural disasters and professional risks

How do you choose the right BOP for a construction business?

When shopping for BOP insurance for your construction business:

Find out what’s covered: When comparing BOPs, find out what coverages are included and what policy limits are available. If you aren’t sure how much coverage you need, an agent can provide a recommendation based on your business size, revenue and unique risks.
Check out each company before purchase: It’s a good idea to read customer reviews to better understand an insurer’s strengths and weaknesses. Pay attention to reviews on claims handling, customer service and policy renewals.
Ask about discounts: Some insurance companies offer discounts to BOP customers. For example, you might be able to save money by bundling a BOP with another policy or installing smoke alarms and fire sprinklers in your office.
Shop around: The cost of BOP insurance is different for various construction businesses. To find the most affordable BOP, shop around and compare rate quotes from a few different carriers.
Understand the exclusions: Every BOP has exclusions. Read the fine print so you know what losses you aren’t covered for. To fill gaps in your BOP, you might need to purchase other types of insurance.

What our expert says

Q: Why should construction business consider BOP insurance?

Andy Lea Chief insurance officer at Embroker, a digital insurance company.

"For small businesses, a BOP is like having a financial safety net. It covers many potential liabilities associated with running a business such as someone getting hurt on the property and protecting against financial losses from damaged/stolen equipment."

Frequently asked questions

Does a BOP cover employee injuries?

No, a BOP doesn’t cover employee injuries. Employee injuries are covered by workers’ compensation insurance.

Are natural disasters like floods or earthquakes covered under a BOP?

Most BOPs exclude property damage caused by floods and earthquakes, but most other natural disasters are covered.

Does a BOP cover tools off-site?

While it depends on the specific BOP, many construction businesses purchase separate tools and equipment insurance.

Can a contractor without a physical office get a BOP?

Yes. Some contractors without a traditional office can qualify for a BOP, depending on how their business operates and which properties needscoverage.