Commercial & Specialty Property

The Businessowners Policy (BOP)

The Businessowners Policy (BOP) is a pre-packaged commercial policy for small to mid-size businesses — retail stores, offices, apartment buildings, and similar eligible risks. It bundles commercial property and commercial general liability into a single, simplified contract, much as a Homeowners policy packages coverage for individuals. Because it is standardized, the BOP is efficient to underwrite and often includes valuable coverages built in, such as business income, that must be purchased separately on larger programs.

Eligibility is restricted by size and type of business: large manufacturers, certain high-hazard operations, automobile dealers, banks, bars, and businesses exceeding stated size or revenue limits are not eligible for a BOP and must instead build coverage through a Commercial Package Policy. The BOP's property section can be written on a named-peril or special (open-peril) basis depending on the form, and its property is typically valued on a replacement cost basis.

Because so many coverages are bundled and pre-set, the BOP trades the flexibility of a modular program for simplicity and price — the right trade for a small business with ordinary exposures.

Commercial Package Policy (CPP) and the BPP Form

The Commercial Package Policy (CPP) is modular: the insured combines two or more standalone coverage parts under a common declarations and common conditions. Available coverage parts include:

Combining parts in one policy earns a package discount and avoids coverage gaps. At the heart of the property part is the Building and Personal Property Coverage Form (BPP), the standard ISO commercial property form.

The BPP insures three property categories: the Building (the structure, fixtures, permanently installed machinery, and outdoor fixtures); Your Business Personal Property (the insured's contents, furniture, stock, and machinery inside or near the building); and Personal Property of Others in the insured's care, custody, or control. The BPP itself does not state which perils are covered — that is determined by a separate causes-of-loss form attached to it.

Causes-of-Loss Forms and Business Income

Commercial property perils are governed by three causes-of-loss forms attached to the BPP:

• Basic Form — a short named-peril list: fire, lightning, explosion, windstorm/hail, smoke, aircraft/vehicles, riot/civil commotion, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action.
• Broad Form — the Basic perils plus falling objects; weight of snow, ice, or sleet; and water damage, plus a limited collapse coverage.
• Special Form — open peril: covers risk of direct physical loss to covered property unless specifically excluded. This is the broadest and most commonly chosen.

Business Income (interruption) coverage is a time-element coverage that pays the net income the business would have earned plus continuing normal operating expenses (including payroll) while operations are suspended by a covered loss. It runs through the period of restoration — from the date of loss until the property is or should be repaired. It is frequently paired with Extra Expense coverage, which pays the additional costs to keep operating (renting a temporary location, expediting repairs) and minimize the downtime.

A common exam point: business income is triggered by direct physical loss to covered property from a covered peril — a slowdown with no physical damage does not trigger it. Coverage may also extend for a limited time after repairs are complete, while the business rebuilds its customer base.

Inland Marine and the NFIP Flood Program

Inland marine evolved from ocean marine and covers property that moves or is portable rather than fixed at one location: property in transit, mobile equipment (contractors' tools), fine art, jewelry and furs, scheduled valuable items, and bailee property held for customers. The unifying theme is that the property is transportable or its value derives from transportation or communication. On the personal side, a Personal Articles Floater schedules high-value items (rings, cameras) at agreed values with no deductible.

Flood is excluded by virtually all standard property and Homeowners forms, so it is written through the National Flood Insurance Program (NFIP), a federal program administered by FEMA. Key tested figures for the standard (regular) program:

NFIP policies carry a 30-day waiting period before coverage takes effect (with limited exceptions), settle most residential building losses on a replacement cost basis only for a primary residence insured to at least 80% of value, and pay contents on an ACV basis. Coverage is tied to a community participating in the program and to the property's flood zone, with rates reflecting the property's elevation and risk.

The NFIP defines a flood specifically as a temporary condition of partial or complete inundation of normally dry land — from overflow of inland or tidal waters, unusual surface-water runoff, or mudflow — which is exactly the surface-water peril that standard property forms exclude. Where a property needs limits above the NFIP caps, an insured can buy excess flood coverage from a private insurer that sits on top of the federal program.