Here's a question that trips up a lot of business owners: Should I get commercial property insurance, or is a Business Owners Policy (BOP) the better move? The answer depends on what you're protecting and what risks keep you up at night. If you're running a small retail shop with standard equipment and inventory, a BOP probably gives you everything you need at a price that won't break the bank. But if you're operating a manufacturing facility with millions in specialized equipment, or you've outgrown the typical small business mold, standalone commercial property insurance with higher limits might be the smarter play.
Let's break down what each policy actually covers, when one makes more sense than the other, and how to figure out which option protects your business without paying for coverage you don't need.
What's Actually in Each Policy?
Commercial property insurance is straightforward: it protects your physical business assets. We're talking about your building (if you own it), your equipment, your inventory, furniture, computers, and all the stuff that makes your business run. If a fire destroys your warehouse, a burst pipe floods your office, or a vandal smashes your storefront windows, commercial property insurance covers the damage and helps replace what you lost. Many policies also include business interruption coverage, which replaces lost income if you have to temporarily close while repairs are being made.
A Business Owners Policy takes that same commercial property coverage and bundles it with general liability insurance. Think of a BOP as the combo meal of business insurance. You get property protection plus coverage for customer injuries, damage to someone else's property, and advertising injury claims like copyright infringement or slander. If a customer slips on your wet floor and breaks their ankle, or if you accidentally damage a client's property while working at their location, the liability portion of your BOP handles those claims. In 2024, the median monthly cost of a BOP was just $67, making it an affordable option for small businesses that need both types of coverage.
When a BOP Isn't Enough
BOPs sound pretty great, right? For many small businesses, they absolutely are. But they come with limitations that matter if your business doesn't fit the typical small-business profile. Most insurance carriers restrict BOPs to businesses with fewer than 100 employees, annual revenues under $5 million, and premises smaller than 25,000 square feet. If you've grown beyond those thresholds, you're likely looking at a Commercial Package Policy (CPP) or standalone commercial property insurance instead.
Coverage limits are another sticking point. BOPs typically offer lower limits because they're designed for small businesses with modest property values. If you own a building worth $2 million, or your inventory and equipment total $500,000, standard BOP limits might not fully cover your assets. Standalone commercial property insurance lets you set much higher limits that actually match your property values. You can also add specialized endorsements for risks that BOPs don't typically cover, like equipment breakdown, electronic data processing coverage for computer systems, or inland marine coverage for tools and equipment you transport to job sites.
High-risk industries also tend to outgrow BOPs quickly. If you operate a restaurant, a construction company, or a manufacturing facility, the standard BOP package might exclude certain types of coverage you absolutely need. That's when a CPP or standalone property policy with custom endorsements becomes necessary. You'll pay more, but you'll actually be covered when something goes wrong.
When Standalone Commercial Property Insurance Makes Sense
Sometimes you just need property coverage, period. Maybe you already have general liability insurance through another policy, or you're in a situation where liability risk is minimal but property risk is significant. Standalone commercial property insurance is ideal in these scenarios because you're not paying for bundled coverage you don't need.
Here's a real-world example: Say you own a commercial building that you lease to multiple tenants. Your tenants carry their own liability insurance, but you need property coverage for the building itself. A standalone commercial property policy protects your investment without duplicating liability coverage you don't need. Or maybe you run an online business with a warehouse full of inventory but minimal customer foot traffic. Your property risk is high, but your liability exposure is low. Why pay for a BOP when standalone property insurance gives you exactly what you need?
Standalone policies also offer more flexibility in terms of coverage limits and deductibles. You can choose higher limits for specific categories like equipment or inventory, and adjust your deductible to control premium costs. If you've invested heavily in specialized equipment—think medical devices, printing presses, or restaurant kitchen equipment—you can tailor your property coverage to protect those specific assets without being constrained by BOP limits.
The Cost Factor: Is Bundling Really Cheaper?
One of the biggest selling points of a BOP is cost savings. Bundling commercial property and general liability coverage into one policy typically costs less than buying them separately. For small businesses that need both coverages, this makes BOPs a no-brainer. The average BOP premium in 2024 was $118 per month, with many businesses paying even less depending on their industry, location, and coverage needs.
But here's the thing: if you don't need liability coverage, or if you need property limits that exceed what BOPs offer, paying for bundled coverage doesn't save you money—it costs you more. Standalone commercial property insurance lets you pay only for what you actually need. And if your business has grown to the point where you need a CPP with higher limits and specialized endorsements, yes, you'll pay more than a basic BOP costs, but you're getting coverage that actually protects your assets. Underinsuring your property to save a few hundred bucks a year is a recipe for financial disaster when a major loss happens.
How to Decide Which Option Is Right for You
Start by asking yourself a few key questions. Do you need both property and liability coverage? If yes, and if your business fits within the size and revenue limits for BOPs, start there. It's the most cost-effective option for small businesses in low-risk industries. But if you already have liability coverage, or if your business doesn't have significant liability exposure, standalone commercial property insurance makes more sense.
Next, take stock of your property values. Add up the replacement cost of your building (if you own it), your equipment, your inventory, and any other business property. If that total approaches or exceeds $500,000, you'll want to verify that BOP limits can accommodate your needs. Many businesses discover that standard BOP limits fall short, making standalone property coverage with higher limits necessary.
Finally, consider your industry and specific risks. If you operate in a high-risk industry, have specialized equipment, or need coverages like equipment breakdown or inland marine protection, a CPP or standalone commercial property policy gives you the flexibility to add those endorsements. Talk to an insurance agent who specializes in commercial coverage. They can compare quotes for both BOPs and standalone policies, helping you see exactly what you're getting for your premium dollars.
Getting Started with the Right Coverage
The bottom line is this: commercial property insurance and BOPs aren't competing options—they're different tools for different situations. If you're a small business owner who needs both property and liability coverage, a BOP gives you comprehensive protection at an affordable price. If you've outgrown BOP limits, need specialized coverage, or simply don't need liability protection, standalone commercial property insurance offers the flexibility and higher limits your business requires.
Ready to compare quotes and find the right coverage for your business? Reach out to us at 1-800-INSURANCE. We'll help you evaluate your options, explain what you're actually paying for, and make sure your property is protected without overpaying for coverage you don't need. Your business is worth protecting—let's make sure you've got the right policy in place.
