If you run a demolition contracting business, you've probably heard the term "Business Owners Policy" tossed around. Maybe your insurance agent mentioned it, or you saw it while comparing quotes online. Here's the straightforward truth: a BOP can save you money and simplify your insurance, but only if it actually fits your operation. For some demolition contractors, it's perfect. For others, it's like trying to wear shoes two sizes too small—technically possible, but you'll regret it.
Let's break down exactly when a BOP makes sense for your demolition business, what's typically included, and what gaps you'll need to fill with other coverage.
What Is a Business Owners Policy?
A Business Owners Policy bundles two essential coverages into one package: general liability insurance and commercial property insurance. Think of it as the insurance equivalent of a combo meal—you get multiple things you need, and it costs less than buying them separately.
General liability covers third-party bodily injury and property damage. If your crew accidentally damages a client's building beyond the demolition scope, or if debris from your site injures a passerby, general liability steps in. Commercial property insurance covers your own business property—your office, warehouse, equipment, and tools—if they're damaged by fire, theft, vandalism, or covered weather events.
Most BOPs also include business interruption insurance, which replaces lost income if a covered event forces you to temporarily shut down. For demolition contractors, this might mean coverage if your equipment yard burns down and you can't take on projects while replacing your excavators and skid steers.
When Does a BOP Make Sense for Demolition Contractors?
BOPs are designed for small to medium-sized businesses with relatively predictable risks. In the demolition world, that typically means contractors who handle standard commercial and residential demolition projects—tearing down houses, small commercial buildings, interior demolition, and site clearing.
Your business is probably a good fit for a BOP if you operate with annual revenues under $5-10 million, maintain a permanent business location (like an office or equipment yard), and perform mostly routine demolition work. The cost savings—typically 10-15% compared to buying separate policies—add up quickly, especially when you're working with tight margins.
However, if you handle specialized high-risk work, you'll likely need more than a standard BOP. Large-scale industrial demolition, high-rise projects, bridge demolition, or any work involving hazardous materials like asbestos typically requires custom coverage. Insurance carriers view these operations as significantly riskier and won't cover them under standard BOP terms.
What's Typically Included in a Demolition Contractor BOP?
Standard BOP coverage for demolition contractors usually includes general liability with limits around $1 million per occurrence and $2 million aggregate. This covers bodily injury and property damage claims from your operations, products (like if salvaged materials you sold cause damage), and completed operations (claims that arise after you finish a project).
The commercial property portion typically covers your building (if you own it), business equipment and tools, inventory, and business personal property. For demolition contractors, this means your excavators, loaders, breakers, hand tools, safety equipment, and office contents. Most policies cover these items whether they're at your permanent location or temporarily elsewhere—though tools and equipment regularly traveling between job sites often need additional inland marine coverage.
Business interruption coverage kicks in if a covered loss shuts down your operations. This typically includes lost income and continuing expenses like loan payments and employee salaries. Some policies include extra expense coverage, which pays for costs to get back up and running quickly—like renting equipment while yours is being repaired or replaced.
Many BOPs also include medical payments coverage (typically $5,000-$10,000), which pays for immediate medical expenses if someone is injured on your property, regardless of fault. This can prevent small incidents from turning into lawsuits.
Common Exclusions and Coverage Gaps
Here's where it gets tricky. Standard BOPs come with exclusions that hit demolition contractors particularly hard. Most policies exclude or severely limit coverage for pollution and contamination, which means if you disturb asbestos, lead paint, or contaminated soil during demolition, you're likely on your own unless you've purchased specialized environmental coverage.
Underground work—like demolishing foundations, basements, or utilities—often requires separate coverage or endorsements. Same goes for work above certain heights; many insurers set limits (commonly around 3-5 stories) beyond which you need additional coverage.
Workers' compensation isn't included in a BOP. In most states, if you have employees, you're legally required to carry separate workers' comp coverage. For demolition work—which has higher injury rates than many other construction trades—this coverage is non-negotiable and typically represents a significant insurance expense.
Commercial auto insurance is another separate policy you'll need. Your trucks, dump trailers, and any vehicles used for business aren't covered under a BOP. Given that demolition contractors typically operate multiple vehicles and transport heavy equipment, this represents another substantial coverage gap.
Professional liability (errors and omissions) usually isn't included either. If you provide consulting services—like advising on whether a structure can be safely demolished or should be preserved—you might need this coverage to protect against claims of professional negligence.
Additional Coverage Demolition Contractors Should Consider
Beyond a BOP, most demolition contractors need inland marine insurance (also called contractor's equipment coverage). This protects tools and equipment that move between job sites. Unlike the property coverage in your BOP, inland marine policies typically cover equipment anywhere in the country, and they often include protection against more perils—like accidentally damaging your own equipment during operations.
If you take on projects where you're responsible for the entire demolition contract—not just your portion of work—you might need builder's risk insurance or installation floater coverage. These policies protect against damage to the project itself during the course of work.
Commercial umbrella insurance provides additional liability coverage above your BOP limits. Given that demolition accidents can result in catastrophic property damage or injuries, many contractors carry umbrella policies of $2-5 million or more. These policies are relatively inexpensive for the protection they provide.
For contractors who handle any environmental remediation or work with known contaminants, pollution liability insurance is essential. Standard BOPs won't cover you if you're found responsible for environmental damage, and cleanup costs can easily run into six or seven figures.
How to Get the Right BOP for Your Demolition Business
Start by honestly assessing your operations. Document the types of projects you handle, your annual revenue, the value of your equipment and property, and any specialized services you provide. Be thorough when listing equipment values—demolition equipment depreciates, but replacement costs stay high, and you don't want to discover you're underinsured after a total loss.
Work with an insurance agent or broker who specializes in contractor coverage. Demolition has unique risks, and generic business insurance agents often don't understand the nuances. A specialized agent can help you identify coverage gaps, find endorsements for specific exposures, and negotiate better rates.
Get quotes from multiple insurers. BOP pricing varies significantly between carriers, especially for higher-risk trades like demolition. Some insurers specialize in construction and offer more competitive rates and better coverage options than general business insurers.
Review your policy annually. As your business grows or changes—adding new equipment, expanding into new states, taking on larger projects—your insurance needs evolve. What worked when you had two employees and one excavator won't cut it when you're running multiple crews with millions in equipment.
A Business Owners Policy can be an excellent foundation for your demolition contractor insurance program—but it's rarely the complete solution. The bundled coverage saves you money and simplifies administration, but you'll almost certainly need additional policies to fully protect your business. Take the time to understand what's covered, what's not, and what additional coverage you need to fill the gaps. Your business—and your financial security—depend on getting this right.
