Business owner’s policy for retail stores: What is it and what does it cover?

Why do retail businesses need BOP insurance coverage?

Retail businesses need BOP insurance because it covers the financial and legal risks of potential liabilities as well as the cost of repairing a business location damaged in a fire, windstorm or other covered event in one convenient insurance package. 

For example, if a customer slips and falls in your store and gets injured, the general liability portion of a BOP would cover their injuries.

Additionally, a BOP covers damage to your retail store, inventory and equipment when it's damaged by a covered peril. Your BOP will cover the cost of repairing the store and replacing lost business property.

Some examples of retail businesses that can benefit from a BOP include:

• Antique stores
• Clothing stores
• Convenience stores
• Florists
• Gift shops
• Jewelry stores

What's covered by BOP insurance

BOP insurance for retail businesses includes general liability insurance and commercial property insurance. Here is what’s covered under this type of policy:

• Third-party bodily injury and property damage: A BOP 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 get sued.
• Damage to business property: The commercial property portion of a BOP covers damage to your retail store and business property due to events like fires, theft, vandalism and accidental water damage. It will cover things like displays, inventory, computers and decor.
• Advertising injuries: A BOP covers claims against your business related to advertising injury, which include things like libel, slander and copyright infringement lawsuits. It covers settlements and your legal defense.
• Lost business income: If your BOP policy includes business interruption insurance and your business is forced to shut down temporarily after a covered claim, a BOP will cover lost income so you can pay your rent, utility bills and other necessary expenses.

How much is BOP insurance for retail businesses?

The average cost of BOP insurance for retail businesses is $1,136 per year, or about $95 per month, according to Insureon. However, rates depend on numerous factors, including your location, insurance company and business size.

It’s usually cheaper to purchase a BOP than to buy general liability insurance and commercial property insurance separately. Insureon lists the average price of general liability insurance at $735 a year and commercial property at $800 a year. 

Additional coverages tailored for retail businesses

While many retail businesses can benefit from 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. It’s legally required in nearly every state.
• Commercial umbrella insurance: Commercial umbrella insurance extends the coverage limits you have on other liability policies, like general liability insurance and commercial auto insurance.
• Cyber insurance: If your retail business is targeted in a cyber attack, cyber insurance covers things like customer notification, credit monitoring and cyber extortion payments.

Factors that influence BOP costs for retail businesses

BOP insurance premiums are different for every retail business. Some of the factors that can affect the cost of your insurance coverage include: 

• Location
• Type of retail business
• Business property value
• Claim history
• Coverage limits
• Deductibles
• Number of employees

Benefits of a BOP for retail businesses

These are some of the biggest benefits of a BOP for retailers:

• Provides comprehensive coverage: A BOP combines general liability and commercial property insurance, two of the most important policies for retail businesses. When you purchase a BOP, you get both coverages at a cheaper rate.
• Covers potential third-party lawsuits: BOP insurance protects your business against the financial and legal consequences of third-party bodily injury and property damage lawsuits. Without insurance, these types of claims could have major financial consequences for your business.
• Pays for property damage repairs: If your storefront or business property gets damaged in a covered claim, a BOP will cover the cost of repairing the building and replacing the contents, up to your policy limits.

 How to get the right BOP for your retail business

When shopping for BOP insurance for your retail business, experts recommend you do the following: 

• 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 store.
• Shop around: The cost of BOP insurance is different for every retail business. To find the most affordable BOP, shop around and compare quotes from a few different insurance companies.
• Understand the exclusions: Every BOP has exclusions. Read the fine print so you know what losses aren’t covered. To fill gaps in your BOP, you might need to purchase other types of insurance.

Retail business owner’s policy exclusions

BOP insurance for retail 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
• Data breaches

What our expert says

Q: Why should retail 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."