Insurance
A Deep Dive Into Business Owners Policy Exclusions to Avoid Surprises
January 27, 2025
| January 27, 2025
Author: KimberleeEdited by: Kimberlee and Reviewed: Kimberlee
A business owner’s policy (BOP) is an important insurance policy for small business owners to have. It covers them for multiple types of claims, such as those resulting from general liability, commercial property, and business interruption losses. Insurance companies bundle these three types of policies into one for better underwriting and fewer gaps in coverage when a claim arises. However, some exclusions apply that small business owners should be aware of.
The business owner’s policy covers common claims for a multitude of losses and claims, such as slip-and-fall accidents, property losses, and business interruption. For many business owners, this is the first and primary insurance policy they purchase because it provides the financial security to get past some of the most common claims they might face and their costly results.
Here are some common BOP exclusions.
There are some claims exclusions for the general liability portion of the business owner’s policy:
There are limitations to commercial property claims in a business owner’s policy:
Certain exclusions to claims of business interruption coverage exist:
Insurance companies have common reasons for excluding certain claims for business owners:
Let’s take a look at specific exclusion scenarios.
Unless a BOP purchases a cyber liability endorsement, it does not cover claims associated with cyber and data breaches. Business owners must be prepared to mitigate a loss without insurance coverage and pay any compliance mandates.
Professional liability is covered by insurance companies through professional liability insurance, also known as errors and omissions insurance. This covers professional mistakes and contractual liability.
Acts of terrorism are not covered under the standard BOP. Insurance companies often have exclusions for terrorism and war acts.
Exclusions can have a significant impact on small businesses. When coverage is not available for a specific type of loss, the business assumes the financial risks of claims, which can result in legal implications and liability. Businesses should have a contingency plan for operational considerations when buying insurance and overcoming exclusions.
To mitigate the effects of BOP exclusions, businesses should:
Exclusions can not be negotiated and are a standard part of an insurance policy. However, small businesses may be able to add endorsements to increase coverage and overcome some exclusions.
A business owner’s policy should be reviewed at least once per year or when there is a significant change in the business profile.
Businesses are left to self-insure if a claim is denied due to an exclusion. Unless an endorsement was purchased to cover the exclusion, there isn’t much a business owner can do but pay for the loss out of pocket.
Now that you understand exclusions, it is important to shop for insurance with a trusted carrier to get the most coverage for the best price. Shop among our best business owner’s policy carriers for a trusted resource for your insurance needs.
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