A business owner’s policy that fits your business.

Inside form BP 00 03: property and liability in one form

ISO writes its BOP on one document, Businessowners Coverage Form BP 00 03, which holds the property coverage, the liability coverage and the policy conditions. IRMI calls it a 53-page form, with about 170 program endorsements.

Section I, property

Covered property is Buildings, Business Personal Property, or both, depending on which has a limit shown on the declarations. ISO's February 2025 overview lists built-in coverages, each with its own limit, including:

• Debris removal: up to 25% of the loss plus up to an additional $25,000 for each location.
• Business income and extra expense: built in (more below).
• Newly acquired or constructed property: up to $250,000 for buildings and $100,000 for business personal property.
• Personal property off premises: up to $10,000 while in transit or at premises you don't own, lease or operate.

ISO describes loss settlement as generally replacement cost, with an 80% insurance-to-value requirement that an optional endorsement can waive. See how coinsurance clauses work.

Section II, liability

Section II is designed to respond to bodily injury, property damage and personal and advertising injury, with defense costs paid outside the limits. Compared with a standalone general liability policy, the BOP uses a single Liability and Medical Expenses limit, and ISO sets both the general aggregate and the products-completed operations aggregate at twice that limit. IRMI notes the BOP has no automatic coverage for newly acquired or formed organizations, while the ISO CGL covers them for up to 90 days; ISO offers a BOP endorsement to add them. More in BOP vs. general liability.

Business income in a BOP: the 72-hour clock

The 07/13 edition of BP 00 03, as quoted in a New Jersey court opinion, is written to pay the actual loss of business income from the necessary suspension of operations during the "period of restoration," caused by direct physical loss of or damage to property at the described premises from a covered cause of loss. ISO adds:

• 72-hour time period deductible. ISO builds 72 hours into the definition of period of restoration. An optional ISO endorsement replaces it with zero hours.
• 12 consecutive months. The loss must occur within 12 consecutive months after the damage. ISO's Revised Period of Indemnity endorsement can shorten or extend that window.
• No set dollar limit unless endorsed. IRMI notes business income and extra expense aren't subject to a limit of insurance unless the policy is endorsed to impose one.
• Extended business income: up to an additional 60 days after operations resume.
• Extra expense: necessary expenses to avoid or minimize the suspension of business.

Civil authority. In the 07/13 edition quoted by that court, this applies when damage to other property leads civil authority to prohibit access to your premises, which must be within the prohibited area and not more than one mile from the damaged property. Business income coverage begins 72 hours after the first action of civil authority and runs up to four consecutive weeks; extra expense begins immediately. The insured there also had a carrier enhancement endorsement widening the distance to five miles, so I compare those endorsements.

A BOP for a home-based business

Robin Olson's 2024 IRMI review of ISO's HO 3 homeowners form shows why a homeowners policy is a weak fit for a working business:

• Liability arising from a business conducted from an insured location is excluded, with narrow exceptions.
• Business property is limited to $3,000 on the residence premises and $1,500 away from it.
• Activities that paid $5,000 or less in the 12 months before the policy period may fall outside the form's definition of "business."

For larger home-based businesses, the article says the solution may be a separate BOP, and that professional liability, auto, excess liability and workers' compensation needs should be evaluated too. The D.C. regulator likewise notes a home-based business may start out with a BOP and expand coverage as it grows. I'll ask whether clients visit, whether you keep inventory or equipment at home, and whether you sell online, since ISO lists internet retailers as eligible. See home-based business insurance and the California requirements.

Official sources

• ISO's Businessowners Policy ("BOP") Program overview, Insurance Services Office, February 11, 2025
• The Businessowners Policy, IRMI
• Businessowners Policy Basics, IRMI white paper
• Mac Property Group LLC v. Selective Fire and Casualty Ins. Co., N.J. Super. Ct. Law Div., CAM-L-2629-20 (2020)
• Small Business Guide to Commercial Insurance (text version), California Department of Insurance
• Consumer Guide: Business Owner Package, D.C. Department of Insurance, Securities and Banking
• Small business owners insurance, Minnesota Department of Commerce
• Insuring the Home-Based Business, Part 1, Robin Olson, IRMI (September 30, 2024)
• The Ins and Outs of NFIP Commercial Coverage, FEMA FloodSmart