A business owners policy is a type of insurance policy designed for small businesses to cover a range of incidents. There are two main parts of a business owners policy: commercial property coverage and general liability insurance. 
Commercial Property Insurance
Commercial property insurance covers physical property owned by the business. It provides compensation in case the physical property, equipment or stock of a business is damaged or destroyed due to a covered incident. Covered incidents include:
- Fire
- Wind
- Hail
- Lightning
- Smoke
- Falling objects
- Explosions
Damage caused by floods and earthquakes are commonly excluded from commercial property insurance but can be added as a separate policy. This insurance also doesn’t usually cover vehicles owned by the business, fences, or outdoor signs.
General Liability
General liability insurance is designed to protect the business and third parties in case of an accident involving bodily injury, property damage or personal and advertising injury. If a customer slips and falls in your grocery store, general liability insurance will assist in paying the victim’s medical expenses related to the incident as well as providing the business with compensation for legal fees in case of a lawsuit.
Personal and advertising injury refers to incidents of defamation of character or idea theft. It covers claims regarding libel, slander, copyright infringement, unlawful detainment or arrest, stolen advertising ideas and more. These types of claims generally come from competitors but can come from other third parties, as well. For example, say you see a customer in your retail store going in and out of the dressing room. You believe they’re stealing, so you forcefully block them to remain in the dressing room to investigate. It turns out that they weren’t stealing, and you let them leave. The customer can then file a claim against you for a false arrest.
Additional Coverage
Business owners policies often come with a third type of coverage that is often overlooked, which is business interruption insurance. This insurance, usually an endorsement on a commercial property policy, provides compensation for the business while it is unable to operate due to an unexpected disaster or incident, such as a tornado, hurricane, government mandate, etc. This coverage can replace a loss of income while the business is inoperable and may even offer wage replacement for employees.
Small businesses may add coverage to their business owners policy depending on their business’ needs, so be sure to speak with your insurance agent about the right coverage for your business.