If you're running a home remodeling business, you've probably heard about Business Owner's Policies and wondered whether bundling your coverage makes sense or if you should buy general liability and property insurance separately. It's a legitimate question, and the answer depends on where your business is right now and where it's headed.
Here's the thing: most small remodeling contractors can save money and simplify their insurance with a BOP. But as your business grows—more employees, bigger projects, specialized equipment—standalone policies start to make more sense. Let's break down exactly when each option works best for your remodeling business.
What's Actually in a BOP for Remodeling Contractors?
A Business Owner's Policy packages two essential coverages into one policy: general liability insurance and commercial property insurance. For a home remodeling contractor, that means you're covered if a customer trips over your equipment and gets hurt (general liability), plus you're protected if your tools get stolen from your truck or your office equipment gets damaged in a fire (commercial property).
The general liability portion covers third-party bodily injury and property damage. So if you accidentally knock over a client's expensive vase while installing cabinets, or if sawdust from your work damages their hardwood floors, your BOP has you covered. The property coverage protects your business assets—your office space, tools, equipment, computers, and furnishings.
What makes a BOP attractive for remodeling contractors is the convenience. You're dealing with one policy, one renewal date, one insurance company. Plus, most BOPs include business interruption coverage, which pays for lost income if you can't work because of a covered property loss. If a fire destroys your workshop and you can't take on projects for two months, that coverage keeps money coming in.
The Real Cost Difference in 2025
Let's talk numbers. For home remodeling contractors in 2025, a BOP costs an average of about $102 per month, or roughly $1,224 annually. General liability insurance alone averages around $81 per month ($972 per year). That means you're paying about $21 more per month for a BOP compared to just general liability—but here's the crucial part: that BOP includes commercial property coverage.
If you were to buy general liability and commercial property insurance separately, you'd typically pay 15% to 30% more than what a BOP costs. You could save around $57 per month by bundling these coverages in a Business Owner's Policy instead of purchasing them standalone. Over a year, that's nearly $700 in savings—enough to cover a nice set of power tools or invest in marketing your business.
The math is pretty straightforward: if you need both liability and property coverage (and most remodeling businesses do), a BOP is the more economical choice. The only time standalone general liability makes sense is if you truly don't need property coverage—maybe you work out of your home with minimal equipment and your homeowners insurance adequately covers your tools.
Who Actually Qualifies for a BOP?
Here's where things get specific. Not every remodeling business qualifies for a BOP, and understanding the eligibility requirements is crucial before you waste time getting quotes. According to Insurance Services Office (ISO) standards, contractors are eligible for a BOP subject to several key restrictions.
First, your annual payroll typically needs to be $300,000 or less. Second, you can't do work at heights of more than three stories. Third, your business generally can't exceed $6 million in annual gross sales or have any single location exceeding 35,000 square feet. Most insurers also limit BOPs to businesses with fewer than 100 employees, though some flexibility exists depending on your revenue and property value.
But here's a critical gotcha for remodeling contractors: many insurance carriers add specific exclusions that can gut your coverage. Some policies include a subcontractor or independent contractor exclusion, meaning if you hire subs and something goes wrong, you might not be covered. Even more concerning, some carriers add exclusions that void coverage for any claim arising from a construction or remodeling project—which is literally your entire business.
This is why you need to read your BOP policy carefully or work with an insurance agent who specializes in contractor coverage. A cheap BOP that doesn't actually cover your remodeling work is worse than useless—it's a false sense of security that could bankrupt you when a claim happens.
When Standalone Policies Make More Sense
As your remodeling business grows, there comes a point where a BOP becomes too limiting. If you've crossed the $300,000 payroll threshold or you're regularly working on commercial buildings above three stories, you're already outside BOP eligibility. But even before you hit those hard limits, you might need standalone policies for other reasons.
Higher coverage limits are a common trigger. Standard BOPs often cap general liability at $1 million per occurrence and $2 million aggregate. If you're taking on larger renovation projects—say, whole-house remodels in expensive neighborhoods—clients or lenders might require $2 million or even $5 million in liability coverage. You'll need a standalone general liability policy with higher limits, and at that point, it might make sense to separate your property coverage too.
Specialized coverage needs are another reason to go standalone. Maybe you've invested in expensive equipment—a $40,000 trailer full of professional-grade tools, or specialized machinery for custom millwork. A BOP's standard property coverage might not adequately protect that equipment, especially if it's frequently off-site. An inland marine policy or equipment floater gives you better coverage for tools and materials in transit or at job sites.
Some industries require specific protections that are best addressed through standalone policies rather than a one-size-fits-all BOP. If you're doing high-end kitchen remodels with $50,000 appliance packages, or historic renovations requiring specialized restoration work, you need tailored coverage that a basic BOP can't provide. Contractors performing complex or high-risk work often benefit more from a combination of standalone policies like general liability, workers' compensation, and dedicated equipment coverage.
Making the Right Choice for Your Remodeling Business
The decision between a BOP and standalone policies isn't permanent. Your insurance needs evolve as your business grows, and you should review your coverage annually. Even if your company meets BOP requirements now, your eligibility could change as your operations expand. Regular policy reviews ensure your protection adapts to changing needs and exposures over time.
For most small remodeling contractors—solo operators or small crews doing residential work, staying under three stories, with modest equipment and payroll—a BOP is the smart choice. You get comprehensive coverage at a lower price point, with the convenience of managing a single policy. It's affordable, straightforward, and designed specifically for small businesses like yours.
But if you're growing beyond those parameters, don't try to force your business into a BOP just to save a few bucks. Inadequate coverage or policy exclusions that leave gaps in your protection can cost you far more than the premium savings. Talk to an insurance agent who works with contractors regularly. They can help you determine whether you've outgrown a BOP or if your business still fits comfortably within its parameters.
The bottom line: start with a BOP if you qualify, enjoy the savings and simplicity while your business is small, and be ready to graduate to standalone policies when your remodeling operation demands more specialized or higher-limit coverage. It's not about finding the perfect policy forever—it's about having the right coverage for where your business is today.
