What a business owner's policy does not cover, and what to ask about each gap

A business owner's policy, or BOP, bundles property, business income and liability coverage, but usually leaves out workers comp, commercial auto, professional mistakes, employment claims, flood, earthquake, most cyber risks, pollution and, for a business that sells or serves alcohol, liquor liability. Coverage for a dead walk in cooler and spoiled stock is often optional. Wording varies, so ask your agent about each gap.

Written by Gabe Schouten, Founder of Everhold Insurance · October 29, 2026

What does a business owner's policy cover?

A BOP packages property coverage for business personal property (furniture, equipment and stock) and any building you insure on it; business income, which replaces income lost while covered damage closes or slows your business; and general liability for injuries and damage you cause others.

Many insurance companies use BP 00 03, the standard BOP form from ISO (Insurance Services Office), or their own forms and endorsements (add ons that change the policy). Some restaurants and trades go on a commercial package policy instead, which combines separately chosen property and liability parts; ask your agent whether your business fits a BOP. Most gaps below apply to either. Workers comp and commercial auto are separate business insurance policies, each with its own declarations page, the summary up front (workers comp calls it the information page).

Does a BOP cover an employee hurt on the job?

Generally no. A BOP excludes injuries to your own employees; workers compensation is meant for those. Under Arizona's A.R.S. 23 902 and A.R.S. 23 961, an employer with even one worker regularly employed in the business generally must carry workers comp insurance or be approved to pay claims itself. An Arizona attorney can advise on whether a worker counts as an employee.

Does a BOP cover a car used for work?

A BOP generally excludes both registered vehicles and auto liability, so a vehicle the business owns belongs on a commercial auto policy. When an employee crashes their own car on a work errand, the injured person may also bring a claim against the business. Hired and non owned auto coverage generally protects the business when someone drives a rented car or their own car for your work; many insurance companies add it to a BOP by endorsement, and commercial auto can include it. The standard endorsement pays only after the car's own auto insurance and doesn't pay to fix the car, so ask your agent about it even if you own no vehicle.

Does a BOP cover a professional mistake or an employee's lawsuit?

Generally no. A BOP's liability coverage is built for bodily injury, property damage, and personal and advertising injury, such as libel or slander. A claim that your advice or service cost a client money, with no injury or damage, calls for professional liability, often called errors and omissions, usually a separate policy. The standard form also excludes certain professional services, including cosmetic and personal grooming services, so an injury to a salon client can fall outside it; a salon should ask whether its BOP adds that coverage back by endorsement.

Employee claims over firing, harassment or discrimination fall outside it too; employment practices liability, which some BOPs add by endorsement, is meant for those. Ask your agent about both, and an Arizona attorney about any lawsuit.

Does a BOP cover a data breach?

Usually not. Some BOPs pay a limited amount to restore your own data destroyed by a covered cause of loss, such as a fire, but a breach's own costs, such as investigating it, notifying customers and answering their claims, generally take a separate cyber liability policy or a data breach endorsement some insurance companies offer. Arizona's breach notice law, A.R.S. 18 552, sets notice duties for a business that owns, maintains or licenses unencrypted and unredacted personal information kept on computer. Ask your agent which of those costs an endorsement or a cyber policy may pay, and an Arizona attorney what the law asks of you.

Does a BOP cover flood damage?

Generally no. FloodSmart, the National Flood Insurance Program's site, says most business insurance does not cover flood damage. The program's commercial policies cover the building and its contents, each with its own limit (the cap on what the policy pays) and deductible (the share of each claim you pay first). They don't cover lost business income, and a new policy generally takes effect 30 days after purchase, with a few exceptions, so ask your agent about flood well before monsoon season.

Does a BOP cover a broken cooler, employee theft or an earthquake?

Often not, unless you add them as optional coverages, for an added premium. Equipment breakdown generally covers a sudden mechanical or electrical breakdown of coolers, boilers and other machines; wear and poor maintenance are commonly excluded. Spoilage coverage can respond when refrigeration or power fails beyond your control and stock spoils. On the standard form, equipment breakdown, employee dishonesty (theft by your staff), and money and securities (cash, checks and similar items) apply only when your declarations page lists them. Spoilage and earthquake are added by endorsement, so look for them in your list of endorsements before you ask.

What else does a BOP commonly leave out?

• Pollution. Pollution liability, for claims that your business released something harmful, is generally excluded; if you handle chemicals, ask your agent about a pollution policy.
• Liquor liability. A BOP generally excludes liquor liability for a business that sells or serves alcohol. Under A.R.S. 4 311, a licensee can be held liable in some cases for selling to an obviously intoxicated or underage person whose drinking causes injury, death or property damage; Arizona's definition of spirituous liquor, the statute's term, includes beer and wine. Ask your agent about liquor liability coverage, and an Arizona attorney what the law asks of a licensee.
• Higher limits. When a lease or client wants higher liability limits than your BOP carries, ask your agent whether its own limit can be raised, or about a commercial umbrella, which adds limits above your liability policies.

What to check this week

• Gather the declarations page and list of endorsements for each business policy you carry, and note which of these gaps none of them covers.
• If you keep food or stock cold, look there for equipment breakdown and spoilage, and ask your agent about either one you don't see.
• If you have employees, check that your workers comp information page shows policy dates covering today; if you pay contractors, ask an Arizona attorney whether any count as employees.
• If you take cards or keep customer data, ask your agent what a cyber liability policy would add to your BOP. The free Business Coverage Ledger puts every business policy on one screen and flags gaps like that one.
• Read the insurance section of your lease and any client contract, and set the coverages and limits they require beside your declarations page; if a landlord or client wants proof, ask your agent for a certificate of insurance, a short summary of your coverage.
• To compare, request a quote for a BOP, general liability, workers comp, commercial property or commercial auto.

See what your business insurance may be missing

Coverage depends on underwriting and the terms of your policy.