14.1 Businessowners Policy (BOP) in Depth

Arkansas Property & Casualty Insurance State

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1 Standalone Coverage Map

Standalone Coverage Map

2 Introduction: Arkansas Property & Casualty Insurance Exam Overview

Arkansas Property & Casualty Exam Overview

3 National Portion: Insurance Fundamentals

1.1 Risk, Hazards, Perils, and the Law of Large Numbers 1.2 Insurable Interest, Indemnity, and Other Insurance Principles 1.3 Insurance Contract Law and Elements 1.4 Policy Structure: Declarations, Insuring Agreement, Conditions, Exclusions 1.5 Parties, Agents vs. Brokers, and Authority

4 National Portion: Property Insurance Concepts

2.1 Causes of Loss / Named-Peril vs. Open-Peril 2.2 Valuation: ACV, Replacement Cost, and Functional Value 2.3 Coinsurance and the Coinsurance Formula 2.4 Deductibles, Limits, and Loss Settlement 2.5 Common Property Policy Conditions and Clauses

5 National Portion: Dwelling Policies (DP)

3.1 Dwelling Policy Forms DP-1, DP-2, DP-3 3.2 Dwelling Coverages A-E and Other Coverages 3.3 Dwelling Perils, Conditions, and Endorsements 3.4 Mobile Home and Specialized Dwelling Coverage

6 National Portion: Homeowners Policies - Forms & Section I

4.1 Homeowners Forms HO-2 through HO-8 and Eligibility 4.2 Section I Coverages A-D and Additional Coverages 4.3 Section I Perils Insured Against and Exclusions 4.4 Replacement Cost vs. ACV and Loss Settlement in Homeowners

7 National Portion: Homeowners Policies - Section II & Endorsements

5.1 Section II Coverages E (Liability) and F (Medical Payments) 5.2 Homeowners Conditions and Duties After Loss 5.3 Common Homeowners Endorsements (scheduled property, water backup, ordinance or law)

8 National Portion: Personal Auto Policy - Liability & Injury

6.1 Personal Auto Policy Structure and Eligibility 6.2 Part A Liability and Supplementary Payments 6.3 Part B Medical Payments 6.4 Part C Uninsured/Underinsured Motorists

9 National Portion: Personal Auto Policy - Physical Damage & Duties

7.1 Part D: Coverage for Damage to Your Auto 7.2 Exclusions and Part E: Duties After an Accident 7.3 Part F: General Provisions, Endorsements, and No-Fault Concepts

10 National Portion: Liability Insurance Concepts

8.1 Negligence, Torts, and Legal Liability 8.2 Defenses, Damages, and Vicarious Liability 8.3 Occurrence vs. Claims-Made Triggers 8.4 Bodily Injury, Property Damage, and Personal/Advertising Injury

11 National Portion: Commercial Property Insurance

9.1 Commercial Package Policy Structure and Common Policy Conditions 9.2 Building and Personal Property Coverage Form (BPP) 9.3 Causes of Loss Forms (Basic, Broad, Special) 9.4 Business Income and Extra Expense 9.5 Commercial Property Endorsements and the BOP

12 National Portion: Commercial General Liability - Coverages

10.1 CGL Coverage A: Bodily Injury and Property Damage Liability 10.2 CGL Coverage B: Personal and Advertising Injury, Coverage C: Medical Payments 10.3 Who Is an Insured and Supplementary Payments

13 National Portion: Commercial General Liability - Limits, Triggers & Exclusions

11.1 CGL Limits of Insurance and Aggregates 11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates 11.3 Key CGL Exclusions and Endorsements

14 National Portion: Commercial Auto Insurance

12.1 Business Auto Coverage Form and Covered Auto Symbols 12.2 Commercial Auto Liability and Physical Damage 12.3 Motor Carrier / Trucking and MCS-90 12.4 Garage Coverage Form and Garagekeepers 12.5 Commercial Auto Endorsements

15 National Portion: Workers Compensation

13.1 Workers Compensation Statutory Background and Benefits 13.2 Part One (Workers Comp) and Part Two (Employers Liability) 13.3 Premium Basis, Experience Modification, and Classification 13.4 Other States, USL&H, and Federal Acts 13.5 Workers Comp Exclusions and Endorsements

16 National Portion: Other Commercial Lines - BOP, Crime & Marine

14.1 Businessowners Policy (BOP) in Depth 14.2 Crime and Fidelity Coverage 14.3 Inland Marine and Nationwide Marine Definition 14.4 Ocean Marine Coverages (Hull, Cargo, Freight, P&I)

17 National Portion: Other Commercial Lines - Specialty & Professional

15.1 Farm and Agricultural Coverage 15.2 Commercial Umbrella and Excess Liability 15.3 Professional Liability and Errors & Omissions 15.4 Directors & Officers and Employment Practices Liability

18 National Portion: Other Commercial Lines - Surety, Flood & Specialty

16.1 Surety and Fidelity Bonds 16.2 National Flood Insurance Program (NFIP) 16.3 Cyber, Aviation, and Other Specialty Lines

19 National Portion: Insurance Regulation & Market Conduct

17.1 State Regulation, Licensing, and the McCarran-Ferguson Act 17.2 Rates, Forms, Solvency, and Guaranty Associations 17.3 Producer Authority, Fiduciary Duty, and Company Operations

20 National Portion: Ethics & Unfair Trade Practices

18.1 Unfair Trade Practices and Unfair Claims Settlement 18.2 Producer Ethics, Errors & Omissions Exposure, and Fiduciary Conduct 18.3 Privacy, Fraud, and Consumer Protection

21 Chapter 1: Arkansas P&C Insurance Regulation & Licensing

1.1 Arkansas Insurance Department 1.2 Arkansas P&C Producer Licensing Requirements 1.3 Arkansas Producer Responsibilities

22 Chapter 2: Arkansas Property Insurance

2.1 Arkansas Homeowners Insurance 2.2 Arkansas Commercial Property Insurance

23 Chapter 3: Arkansas Casualty & Auto Insurance

3.1 Arkansas Auto Insurance Requirements 3.2 Arkansas Liability Insurance 3.3 Arkansas Workers' Compensation Insurance

24 Chapter 4: Arkansas Ethics & Professional Conduct

4.1 Ethical Practices and Consumer Protection

14.1 Businessowners Policy (BOP) in Depth

Key Takeaways Explain This Topic AI

The BOP (ISO BP 00 03) is a pre-packaged property/liability/business-income policy for eligible small to mid-sized businesses, with rich automatic features and simplified rating.

BOP property is automatically Special-form (open-peril) at replacement cost, and business income runs 12 months with no coinsurance and no waiting period.

There is no commercial-property coinsurance clause on the BOP, so covered losses pay the loss amount less deductible with no penalty calculation.

Workers compensation, professional liability, and owned commercial autos are never part of a BOP and must be written separately.

Ineligible classes include manufacturers, bars/taverns, auto dealers/repair, banks, and oversized or tall buildings.

Last updated: June 2026

What the BOP Is and Who Qualifies

The Businessowners Policy (BOP) is a pre-packaged commercial policy that bundles property, general liability, and business income for small and mid-sized businesses. The current ISO program runs on the BP 00 03 (Businessowners Coverage Form) , the workhorse form behind most BOPs. Unlike the hand-assembled Commercial Package Policy (CPP), the BOP's coverages are simplified and richly automatic - think of it as the commercial cousin of the homeowners policy.

Quick Answer: A BOP packages property, liability, and business income on one simplified form for eligible small commercial accounts, with broad automatic features and no separate causes-of-loss selection.

Eligibility - Class and Size Driven

Eligibility turns on class of business and size , never on the applicant's wishes. ISO designed the program for apartments, offices, mercantile (retail), processing/service, and limited contractor and wholesale risks within stated limits.

Factor Typical limit
Building size Generally up to ~35,000 sq ft (varies by class)
Annual sales Commonly capped near $3M-$15M by class
Stories Usually 6 or fewer for office/apartment
Class Must appear on the eligible-class list
Ineligible Classes (High-Yield Trap)

Class Reason ineligible
Auto dealers / repair Need Garage / Commercial Auto forms
Bars and taverns Heavy liquor liability
Most manufacturers Complex products exposure
Banks / financial institutions Specialized forms
Large or tall buildings Exceed size/height limits
Condominium associations (most) Specialized association forms

Exam writers love to hand you a manufacturer or a bar and ask whether a BOP fits. It does not - reroute those to a CPP.

A related distractor compares the BOP to the CPP itself. The CPP is a flexible package where the agent selects each coverage part (commercial property, CGL, crime, inland marine, auto) and chooses causes-of-loss forms and coinsurance percentages by hand. The BOP makes those choices for you: it is a standardized program designed for accounts too small to justify custom underwriting. When a stem describes a 50,000-square-foot factory with $40M in sales, the answer is the CPP, not the BOP, because both the size and the manufacturing class break the program limits.

Section I - Property (Why the BOP Sells)

The property section is the BOP's selling point: coverages that each demand a separate CPP form or endorsement are simply built in.

Feature BOP automatic provision
Building Special (open-peril) basis
Business personal property Special basis
Valuation Replacement cost (building and BPP)
Business income & extra expense 12 months, no coinsurance, actual loss sustained, no waiting period
Debris removal Built in
Seasonal increase BPP limit auto-rises up to 25% in peak season
Newly acquired buildings Limited automatic coverage (commonly up to $250,000)

Note what is missing : there is no coinsurance clause on BOP business income, and there is no causes-of-loss menu - coverage is automatically open-peril. That removes the most common penalty trap candidates fear from commercial property.

A Worked Property Loss

A covered fire causes $180,000 building damage at a BOP-insured office whose building limit is $500,000 at replacement cost. Because the BOP carries no commercial-property coinsurance clause, no coinsurance penalty applies . The insurer pays the $180,000 RC loss less any deductible (say $500), or $179,500 . On a coinsured CPP you would first test whether the limit met the required percentage of value before paying - a step the BOP eliminates.