If you run an e-commerce business, you've probably heard conflicting advice about insurance. One broker tells you to get a Business Owner's Policy. Another says you only need general liability. A third insists you need five separate policies. Here's the truth: the right answer depends on what you're actually selling, where you store inventory, and how big your operation is.
The good news? Most e-commerce businesses fit into pretty predictable categories, and there's a straightforward way to figure out whether a bundled Business Owner's Policy makes sense or if you're better off with standalone coverage. Let's break it down.
What Actually Is a Business Owner's Policy?
A Business Owner's Policy (BOP) is essentially a bundle package that combines three core coverages into one policy: general liability insurance, commercial property insurance, and business interruption coverage. Think of it like buying a meal combo instead of ordering everything à la carte.
General liability protects you if a customer sues you because a product you sold caused injury or property damage. Commercial property coverage protects your business's physical assets—your inventory, equipment, computers, and furniture. Business interruption coverage kicks in if something like a fire or flood forces you to shut down temporarily, covering your lost income while you get back on your feet.
For e-commerce businesses in 2026, a BOP typically costs around $104 per month or $1,250 annually. That might sound like a lot until you realize that general liability alone averages $73 monthly and commercial property averages another $67 monthly. Buy them separately and you're looking at $140 per month—that's $36 more per month, or $432 per year, without even getting business interruption coverage.
Who Qualifies for a BOP (and Who Doesn't)
Here's where things get real: not every business can buy a BOP. Insurance companies designed these policies for small, low-risk operations. To qualify, you typically need to have fewer than 100 employees and under $5 million in annual revenue. If you're running a dropshipping business from your spare bedroom or operating a modest online boutique with a small warehouse, you're almost certainly eligible.
But if your e-commerce operation has scaled to the point where you're doing $6 million in annual sales, employing 120 people, or selling products that insurers consider high-risk (like supplements, electronics with lithium batteries, or anything flammable), you're probably going to need standalone policies with customized coverage.
The eligibility requirements exist because BOPs are standardized products. They work great for straightforward operations but can't handle complex risk profiles. Think of it like buying clothes: off-the-rack works perfectly fine for most people, but if you're unusually tall or have specific needs, you need custom tailoring.
When a BOP Makes Perfect Sense for E-commerce
A BOP is usually your best bet if you have physical inventory sitting somewhere—whether that's in a warehouse, a garage, a storage unit, or even just shelves in your home office. If a fire, theft, or water damage could wipe out $10,000 or $50,000 or $200,000 worth of products you've already paid for, you need commercial property coverage. And if you need property coverage anyway, you might as well get the BOP and save money on the bundle.
The business interruption coverage in a BOP is especially valuable for e-commerce. Let's say your warehouse floods and you can't access your inventory for three weeks. During that time, you're still paying for web hosting, advertising, and maybe rent or salaries, but you can't ship products and earn revenue. Business interruption coverage replaces that lost income and helps pay your ongoing expenses. Most standalone general liability policies don't include this protection.
Another situation where BOPs shine: you maintain a physical showroom or retail location in addition to your online sales. The moment you have customers walking through a door, your liability exposure goes up. Someone could slip on your floor, trip over a display, or get injured in your parking lot. The combined liability and property protection in a BOP handles both customer injuries and damage to your physical space.
When Standalone Policies Make More Sense
Standalone policies also become necessary when your business outgrows BOP eligibility limits. Once you cross $5 million in revenue or hire your 100th employee, you're in a different category. At that scale, you typically need higher coverage limits than a standard BOP provides anyway. You might need $2 million or $5 million in general liability coverage instead of the $1 million most BOPs offer. You might need product liability coverage with special endorsements. Standalone policies give you the flexibility to customize each coverage type to match your actual risk exposure.
Some e-commerce businesses also need specialized coverages that BOPs don't include. If you're selling products you manufacture yourself, you might need products liability insurance with pollution coverage. If you provide consulting or design services in addition to selling products, you might need professional liability insurance (also called errors and omissions coverage). If you collect customer payment information, you might need cyber liability insurance. These coverages typically need to be purchased separately, whether you have a BOP or not.
The Real Cost Comparison: Running the Numbers
Let's get specific about costs based on 2026 data. For a typical small e-commerce business, here's what you're looking at:
Business Owner's Policy: $104 per month ($1,250 annually) covering general liability, commercial property, and business interruption. Standalone general liability: $73 per month ($882 annually). Standalone commercial property: approximately $67 per month ($800 annually). If you bought general liability and commercial property separately, you'd pay around $140 monthly or $1,682 annually—that's $432 more per year than a BOP, and you still wouldn't have business interruption coverage.
The math is pretty clear: if you need both liability and property coverage, the BOP saves you between $194 and $624 per year depending on your specific situation. But if you only need liability coverage because you don't hold inventory, then paying $104 monthly for a BOP wastes about $372 per year on property coverage you don't need.
Making the Switch: When to Transition
Most e-commerce businesses should start with a BOP if they hold any inventory and meet the eligibility requirements. It's simpler, more affordable, and covers your essential risks in one policy. But as your business grows, keep an eye on these trigger points that signal it's time to switch to standalone policies:
You're approaching $5 million in annual revenue or 100 employees. You need coverage limits higher than standard BOP policies offer. You're expanding into higher-risk product categories that require specialized coverage. You've added services (like consulting or installation) that create professional liability exposure. You're facing specific exclusions in your BOP that are hurting your business operations.
When you make the switch, work with an insurance broker who specializes in e-commerce businesses. They can help you unbundle your coverage strategically, making sure you don't have gaps between your old BOP and your new standalone policies. The transition should happen at your policy renewal date, not mid-term, to avoid cancellation fees and prorated premium complications.
How to Get Started
If you're trying to decide between a BOP and standalone policies, start by answering these questions: Do you hold physical inventory anywhere? What's the total value of that inventory plus your equipment? Is your annual revenue under $5 million with fewer than 100 employees? Do you need any specialized coverages beyond basic liability and property?
If you hold inventory, fall within the size limits, and don't need highly specialized coverage, a BOP is almost certainly your best choice. If you're a pure dropshipper or digital seller with no physical assets to protect, stick with standalone general liability. And if you've scaled beyond BOP eligibility or need custom coverage, it's time to work with a broker to build a standalone insurance program tailored to your specific risks.
The right insurance setup protects your business without wasting money on coverage you don't need. For most small e-commerce operations, that means starting with a BOP and upgrading to standalone policies only when your growth or risk profile demands it.
