If you run an IT services or tech business, you've probably heard you need insurance. But which kind? A Business Owner's Policy (BOP) sounds convenient, but is bundling really the smartest move? Or should you buy general liability and property insurance separately?
Here's the short answer: for most small IT and tech services businesses, a BOP is the smarter financial choice. You get more coverage for less money. But there's a catch—BOPs have eligibility requirements and coverage gaps that might make standalone policies the better option as you grow. Let's break down when each approach makes sense for your business.
What's Actually in a BOP?
A Business Owner's Policy bundles three essential coverages into one package: general liability insurance (which covers third-party injuries and property damage), commercial property insurance (which protects your equipment, furniture, and office space), and business interruption insurance (which replaces lost income if you can't operate due to a covered event like a fire or natural disaster).
For tech companies, this is particularly valuable. Think about it: your laptops, servers, and networking equipment represent a significant investment. If a pipe bursts in your office and destroys everything, commercial property coverage replaces that equipment. And if you can't work for two weeks while you set up a temporary workspace? Business interruption insurance covers your lost revenue during that time.
The general liability portion kicks in if a client trips over a cable in your office and gets injured, or if you accidentally damage a client's property while working on-site. Legal defense costs alone can run into tens of thousands of dollars—your BOP handles that.
The Cost Advantage: Why BOPs Usually Win
Here's where the math gets interesting. The average BOP costs between $57 and $141 per month as of 2025. Standalone general liability insurance alone costs around $104 per month. That means for just $3 to $37 more per month, you're adding commercial property coverage and business interruption insurance. Many insurers offer an automatic 10% discount when you bundle these coverages into a BOP rather than buying them separately.
If you were to buy general liability and commercial property as separate policies, you'd typically pay more and have to manage multiple renewals, deductibles, and claims processes. The BOP simplifies everything into one policy with one renewal date and one bill.
For small IT services businesses—especially those just starting out—this bundled approach is hard to beat. You get comprehensive coverage without the administrative headache of juggling multiple policies.
BOP Eligibility: Can Your Tech Business Qualify?
Not every business can get a BOP. Insurance companies typically limit BOPs to businesses with 100 employees or fewer and annual revenues under $5 million. They're designed for low-to-moderate-risk businesses, and fortunately, most IT services and tech consulting firms fall into this category.
Professional services like web development, IT consulting, software implementation, and tech support are generally considered low-risk and qualify for BOP coverage. If your business operates from an office or remotely (rather than in a high-risk manufacturing or construction environment), you're likely eligible.
However, there's an important eligibility factor many tech companies overlook: if you need more than one year of business interruption coverage, some insurers won't approve a BOP. For most small tech firms, one year is plenty, but if you're working on multi-year contracts or have long sales cycles, this could be a dealbreaker.
The Critical Coverage Gaps for Tech Companies
Here's where things get tricky. A standard BOP doesn't cover two types of risks that are absolutely critical for IT and tech services businesses: cyber liability and professional liability (also called errors and omissions or E&O insurance).
If you store customer data, process electronic payments, or rely on computer systems for your operations, you need cyber liability insurance. This covers the costs of data breaches, ransomware attacks, and regulatory fines—none of which a BOP will touch. In 2025, cyberattacks are so common that most IT businesses should consider cyber coverage essential, not optional.
Errors and omissions (E&O) insurance protects you if a client claims your work caused them financial harm. Maybe you implemented a software solution that didn't work as promised, or your consulting advice led to a costly mistake. E&O covers your legal defense and any settlements or judgments. For tech consultants and developers, this coverage is non-negotiable—many clients won't even hire you without it.
The good news? You can often add cyber liability and E&O to your BOP as endorsements, or purchase them as separate policies alongside your BOP. Some insurers offer tech-specific bundles that combine E&O and cyber insurance together. The key is understanding that your BOP alone isn't enough—you'll need to supplement it with these additional coverages.
When to Switch to Standalone Policies
As your tech business grows, you may outgrow a BOP's limitations. Here are the signs it's time to switch to standalone general liability and commercial property policies:
You've exceeded eligibility thresholds. If you now have more than 100 employees or generate over $5 million in annual revenue, most insurers won't offer a BOP. You'll need to move to a Commercial Package Policy (CPP) or standalone policies.
You need higher coverage limits. BOPs typically max out at lower limits than standalone policies. If you're working with enterprise clients who require $2 million or more in general liability coverage, you may need standalone policies to meet those requirements.
You require specialized coverage customization. BOPs are standardized packages. If you need specific endorsements, unusual coverage extensions, or industry-specific protections that don't fit the BOP mold, standalone policies give you that flexibility.
Your risk profile has changed. If you've moved into higher-risk work—like critical infrastructure projects, government contracts, or industries known for expensive litigation—you may no longer qualify for a BOP's one-size-fits-all approach. Standalone policies let you tailor coverage to your specific risk exposures.
How to Get Started
If you're a small IT or tech services business just starting out, get quotes for both a BOP and separate general liability plus commercial property policies. Compare the total cost, coverage limits, and deductibles side by side. In most cases, you'll find the BOP offers better value.
But don't stop there. Also get quotes for cyber liability and E&O insurance. Ask your agent whether these can be added as endorsements to your BOP or if you need separate policies. Compare bundled tech insurance packages from providers who specialize in IT businesses—they often combine E&O and cyber coverage at competitive rates.
Review your coverage annually. As your business grows, your insurance needs will change. What works for a two-person startup won't necessarily work for a 20-person agency. Stay in touch with your insurance agent and reassess whether a BOP still makes sense or if it's time to graduate to standalone policies with higher limits and more customization.
The bottom line? For most small IT and tech services businesses, a BOP is the smarter choice. You get comprehensive coverage at a lower cost with less administrative hassle. Just remember to supplement it with cyber and E&O coverage, and be ready to switch to standalone policies as your business grows and your needs become more complex.
