If you're running a general contracting business, you've probably heard about Business Owners Policies—or BOPs—and wondered if they're right for you. Here's the short answer: if you're a smaller contractor managing projects without massive liability exposures, a BOP can save you money and simplify your insurance life. But there's a catch. Not every general contractor qualifies, and the coverage has limits that might surprise you.
Let's break down when a BOP makes sense for general contractors, what's actually included, and what you need to know before you sign up.
What Is a Business Owners Policy (BOP)?
Think of a BOP as the insurance industry's version of a combo meal. Instead of ordering general liability insurance and commercial property insurance separately, you get both in one package—along with business interruption coverage—usually at a discount. For general contractors, this bundled approach can save you 10-15% compared to buying each policy individually.
Here's what's typically included in a BOP:
General liability coverage protects you if someone gets hurt on a job site or if you accidentally damage a client's property. If a homeowner trips over your equipment and breaks an ankle, or if your crew accidentally knocks a hole in their wall, this coverage steps in to handle medical bills, legal fees, and repairs.
Commercial property coverage protects your business property—tools, equipment, materials, and office space—from events like fire, theft, vandalism, or certain weather damage. If your work trailer gets stolen or a fire destroys your tools, this coverage helps you replace what you lost.
Business interruption coverage (also called business income insurance) is the hidden gem most contractors don't appreciate until they need it. If a covered event forces you to pause operations—say, a fire at your office or damage to your equipment storage—this coverage replaces the income you lose during the downtime and helps cover ongoing expenses like rent and payroll.
Who Qualifies for a BOP?
Here's where things get tricky. BOPs are designed for small to mid-sized businesses, and insurers typically have strict eligibility requirements. Most insurers require that your business has fewer than 100 employees and generates less than $5 million in annual revenue. Some insurers set the revenue threshold even lower—around $1 million—so it varies by carrier.
Construction is often considered a high-risk industry, which means not all general contractors automatically qualify for a standard BOP. If you're running larger projects, managing multiple job sites with significant equipment, or doing high-risk work like roofing or structural demolition, you might need a Commercial Package Policy (CPP) instead. A CPP offers more customizable coverage and higher liability limits but costs more.
That said, if you're a smaller general contractor—maybe you focus on residential remodeling, smaller commercial build-outs, or handyman services—a BOP can be a perfect fit. The key is being honest about your operations and risk profile when you shop for coverage.
What Does a BOP Cost for General Contractors?
As of 2025-2026, general contractors can expect to pay around $100 to $170 per month for a BOP, though costs vary widely based on your location, revenue, number of employees, and the type of work you do. For context, the average cost for a small contracting business is about $100 per month, or roughly $1,200 annually. However, if you're running active job sites with expensive equipment and materials, your premium could climb toward $200 per month.
Location matters too. States with higher construction risks or more litigation tend to have higher premiums. For example, BOP costs can range from $325 per month in Alaska to $439 in Pennsylvania for similar coverage levels.
The beauty of a BOP is the bundled discount. By combining general liability and property coverage, you're typically saving 10-20% compared to buying those policies separately. On a $147 monthly policy (the small business average across industries), bundling saves you $7 to $22 per month. That might not sound like much, but over a year, it adds up.
What's Not Covered by a BOP?
This is critical: a BOP doesn't cover everything. There are some big gaps that trip up general contractors if they're not paying attention.
Workers' compensation insurance is not included in a standard BOP. If you have employees, you're legally required to carry workers' comp in almost every state. This coverage pays for medical expenses and lost wages if one of your workers gets injured on the job. You'll need to purchase this separately.
Commercial auto insurance also isn't part of a BOP. If you or your crew drive company vehicles—trucks, vans, trailers—you need a separate commercial auto policy to cover accidents, theft, and liability on the road.
Professional liability (errors and omissions) coverage typically isn't included either. If a client claims your work was faulty or caused financial loss—for example, you miscalculated structural loads and now they need expensive repairs—professional liability insurance covers those claims. General contractors doing design-build work or offering consulting services should consider adding this coverage.
Cyber liability insurance is another coverage you'll need to add separately, especially if you handle client data, accept credit card payments, or store sensitive information digitally.
When a BOP Makes Sense for General Contractors
A BOP is a smart choice if you're a smaller general contractor with straightforward operations. Think residential remodeling, light commercial work, handyman services, or small-scale renovations. If your annual revenue is under $5 million, you have fewer than 100 employees, and you're not taking on projects that require multimillion-dollar liability limits, a BOP gives you solid coverage at a competitive price.
BOPs are also great if you maintain a physical office or storage space with tools and equipment. The property coverage protects your assets, and the business interruption coverage gives you financial breathing room if something goes wrong.
Another benefit: many states and clients accept a BOP as proof of general liability insurance, as long as your liability limits meet their minimum requirements. Most BOPs offer $1 million per occurrence and $2 million aggregate liability coverage, which satisfies the requirements for many licensing boards and contracts.
How to Get Started
If you think a BOP might be right for your general contracting business, start by getting quotes from multiple insurers. Eligibility requirements and pricing vary significantly between carriers, so shopping around is essential. Be prepared to provide details about your annual revenue, number of employees, types of projects you handle, and any subcontractors you work with.
Don't forget to factor in the coverages a BOP doesn't include. If you have employees, add workers' compensation. If you drive company vehicles, add commercial auto. If you offer design services or consulting, consider professional liability. Many insurers will bundle these add-ons with your BOP and give you an additional discount for keeping everything under one roof.
The bottom line? A Business Owners Policy can save you money and simplify your insurance coverage if you're a smaller general contractor with lower risk. But it's not a one-size-fits-all solution. Take the time to understand what's covered, what's not, and whether your business fits the eligibility criteria. When in doubt, talk to an insurance agent who specializes in contractor coverage—they'll help you figure out whether a BOP or a more customized policy is the right fit for your business.
