Business Owners Policy (BOP) Explained: Arkansas Small Business Guide

Running a small business in Northwest Arkansas means juggling countless responsibilities—managing employees, serving customers, handling finances, and planning for growth. The last thing you need is to worry about whether you have the right insurance coverage to protect everything you’ve built.

A Business Owners Policy (BOP) offers Arkansas entrepreneurs a streamlined solution that bundles essential coverages into one comprehensive, cost-effective package. Whether you’re operating a retail shop in Rogers, running a restaurant in Bentonville, or managing a professional services firm in Fayetteville, understanding how a BOP works can save you money while ensuring your business stays protected against common risks.

What Is a Business Owner’s Policy (BOP)?

A Business Owners Policy is a specialized insurance package designed specifically for small to mid-sized businesses. Instead of purchasing multiple separate policies, a BOP combines your most critical coverages into a single, convenient policy—typically at a lower cost than buying each coverage individually.

Think of it as a bundle deal for business insurance. Just as you might save money by bundling your home and auto insurance, a BOP bundles your business property and liability protections, often with additional coverages included.

Core Components of a BOP

Every standard Business Owners Policy includes three fundamental coverage types:

Commercial Property Insurance protects your physical business assets—the building you own or rent, office equipment, computers, furniture, inventory, and supplies. If fire, theft, vandalism, or certain weather events damage your property, this coverage helps pay for repairs or replacement.

General Liability Insurance shields your business from lawsuits and claims when someone gets injured on your premises or when you accidentally damage someone else’s property. This includes customer slip-and-fall accidents, accidental property damage at a client’s location, and even certain advertising injury claims like copyright infringement or slander.

Business Interruption Insurance (also called business income coverage) replaces lost income when a covered event forces your business to temporarily close. If a fire damages your restaurant and you need to shut down for three months while repairs are completed, this coverage helps pay your ongoing expenses like rent, utilities, and employee salaries during the closure.

Who Needs a BOP in Arkansas?

While Business Owners Policies benefit many types of businesses, they’re specifically designed for small to mid-sized operations with relatively straightforward insurance needs. In Northwest Arkansas’s thriving business community, BOPs work particularly well for:

• Retail stores selling clothing, gifts, furniture, or other products
• Restaurants and food service businesses, including cafes, bakeries, and catering companies
• Professional service providers such as marketing agencies, consulting firms, and financial advisors
• Personal service businesses like salons, barbershops, spas, and fitness studios
• Small office operations for accountants, real estate agencies, and insurance agencies
• Trade contractors, including electricians, plumbers, and HVAC technicians
• Wholesalers and distributors with limited manufacturing

Most insurers offer BOPs to businesses with annual revenues under $10 million and property values under $15 million. If your business operates primarily from a single location and doesn’t engage in high-risk activities, you’ll likely qualify for BOP coverage.

Who Typically Cannot get a BOP

Certain business types face risks that exceed what a standard BOP can handle. These businesses typically need specialized coverage or a customized commercial package policy instead:

• Bars and nightclubs require liquor liability coverage
• Manufacturers with extensive production facilities
• Financial institutions like banks and investment firms
• Medical practices and healthcare providers
• Automotive repair shops and body shops
• High-risk contractors like roofing companies

How Much Does a BOP Cost in Arkansas?

For Arkansas small businesses, BOP insurance typically costs between $71 and $141 per month, with an average of around $57-$67 per month for businesses in lower-risk industries. This translates to annual premiums ranging from $684 to $1,767 for most small businesses.

However, your actual cost depends on multiple factors specific to your business:

Your Industry and Risk Level – A marketing consultant working from a small office pays significantly less than a cleaning service company with employees working in multiple client locations. Drone-related businesses pay as little as $25 per month, while pressure washing companies can pay $1,346 monthly due to higher liability risks.

Business Location – Operating in Rogers or Bentonville may result in different rates than running a business in rural Arkansas communities. Population density, local crime rates, and regional weather patterns all influence pricing. Arkansas’s vulnerability to tornadoes, hail, and severe thunderstorms during the spring months can affect property insurance costs.

Property Value – The more valuable your business property, equipment, and inventory, the higher your premium. A retail store with $200,000 in inventory pays more than a consulting firm with $20,000 in office equipment.

Coverage Limits – Higher liability limits and property coverage amounts increase your premium but also provide greater protection. Many Arkansas businesses choose $1 million per occurrence with a $2 million aggregate limit as a standard liability coverage level.

Claims History – Businesses with previous claims pay higher premiums. Filing even one liability claim can increase your premiums by 20% or more, with most insurers reviewing the past three to five years of claims history.

Years in Business – New businesses often pay 10-25% more than established companies because insurers lack historical data to assess risk. After three years of claims-free operation, many businesses see their premiums decrease.

Real Cost Examples for Arkansas Businesses

To give you a clearer picture, here’s what different types of small businesses in Arkansas typically pay for BOP coverage:

• Professional services (IT consultants, marketing agencies): $42-$67/month
• Retail stores: $75-$120/month
• Restaurants and cafes: $120-$170/month
• Cleaning services: $150-$250/month
• Electrical contractors: $140-$200/month

What a BOP Covers (and What It Doesn’t)

Understanding both what your BOP includes and its limitations helps you avoid coverage gaps that could leave your business vulnerable.

Standard BOP Coverage Includes

Building Damage – If you own your business building, your BOP covers structural damage from covered perils like fire, windstorms, hail, lightning, and explosions. Tenants who rent their space receive coverage for improvements they’ve made to the property.

Business Personal Property – Computers, office furniture, machinery, equipment, inventory, and supplies all receive protection against theft, fire, vandalism, and other covered losses.

Liability Protection – When customers, vendors, or visitors get injured on your premises, your BOP covers medical expenses and legal defense costs. It also covers property damage you accidentally cause to others’ property and certain personal and advertising injuries.

Business Income and Extra Expenses – If a covered loss forces your business to close temporarily, this coverage replaces lost profits and pays for ongoing expenses. It can even cover relocation costs if you need to operate from a temporary location during repairs.

Equipment Breakdown – Many BOPs include coverage for equipment failure, protecting you when critical systems like HVAC units, computers, or refrigeration equipment suddenly stop working.

Important Exclusions and Limitations

No insurance policy covers everything, and BOPs have specific exclusions you need to understand:

Flood Damage – Standard BOPs do not cover flooding. Given that Northwest Arkansas experienced severe flash flooding in September 2025, with 2-5 inches of rainfall in just hours, separate flood insurance becomes essential for many Arkansas businesses.

Earthquake Damage – Arkansas sits near the New Madrid Seismic Zone, making earthquake coverage worth considering as an optional endorsement.

Employee Injuries – BOPs do not include workers’ compensation insurance. Arkansas law requires businesses with three or more employees to carry workers’ comp coverage separately.

Professional Errors – If your business provides professional advice or services, claims arising from mistakes, missed deadlines, or negligence require professional liability insurance (E&O coverage), not included in a standard BOP.

Commercial Vehicles – Your BOP doesn’t cover business vehicles. Any car, truck, or van owned by your business or regularly used for business purposes needs separate commercial auto insurance.

Cyber Incidents – Data breaches, ransomware attacks, and other cyber threats require separate cyber liability insurance. While some BOP policies include limited cyber coverage, most Arkansas businesses need dedicated cyber insurance for adequate protection.

Intentional Acts – Deliberate damage, fraud, criminal acts, and intentional copyright infringement aren’t covered under any circumstances.

Customizing Your BOP for Arkansas Business Risks

While BOPs provide comprehensive baseline coverage, Arkansas businesses face specific risks that often require policy endorsements or additional coverages:

Weather-Related Enhancements

Northwest Arkansas experiences severe weather between March and May, including tornadoes, damaging hail, and destructive winds. Your standard BOP covers wind and hail damage, but you may want to increase your deductible or coverage limits based on your property’s vulnerability.

Consider adding:

• Higher wind/hail coverage limits if your building has extensive glass, a vulnerable roof, or expensive inventory
• Flood insurance if your business sits in or near a flood zone
• Ordinance or law coverage ensuring you can rebuild to current building codes if older construction is damaged

Industry-Specific Add-Ons

Depending on your business type, valuable endorsements include:

Accounts Receivable Coverage – If client records are destroyed and you lose track of outstanding payments, this endorsement covers the lost income while you reconstruct your records.

Food Contamination Coverage – Restaurants and food service businesses need protection if their refrigeration fails or contamination forces them to discard inventory.

Employee Dishonesty Coverage – Protects against employee theft, embezzlement, forgery, and fraud.

Tools and Equipment Coverage – Contractors who transport tools and equipment between job sites need coverage for theft or damage outside their business premises.

Hired and Non-Owned Auto Liability – Covers accidents when employees use their personal vehicles for business purposes or when you rent vehicles for business use.

Liquor Liability – Any business that serves or sells alcohol needs this coverage for claims related to intoxicated customers.

BOP vs. Separate Policies: What Makes Financial Sense?

Many Arkansas business owners wonder whether bundling insurance in a BOP actually saves money compared to purchasing general liability and property insurance separately.

In most cases, BOPs deliver significant savings—typically 15-30% less than buying equivalent standalone policies. For example, if purchasing $1 million in general liability coverage costs $50/month and commercial property insurance runs $45/month separately, a BOP combining both might cost only $75/month instead of $95.

Beyond cost savings, BOPs offer three practical advantages:

Simplified Management – One policy, one renewal date, one deductible structure, and one insurance company to work with. When you need to file a claim or update your coverage, you have a single point of contact instead of coordinating between multiple carriers.

No Coverage Gaps – When you buy separate policies from different insurers, you risk coverage gaps or disputes about which policy applies to a particular loss. BOPs eliminate these concerns by housing all coverage under one policy.

Streamlined Claims Process – If fire damages your property and forces a business closure, you file one claim covering both property damage and lost income rather than separate claims with different insurers.

When Separate Policies Make Sense

Some situations warrant purchasing separate policies instead of a BOP:

• Your business has high-value property exceeding BOP limits
• You need significantly different liability limits than property coverage
• Your business operates in multiple locations, requiring varying coverage levels
• You face complex risks that benefit from highly customized policy terms

Working with an independent insurance agency like OZK Insurance allows you to compare both BOP and standalone policy options to identify the most cost-effective solution for your specific needs.

How to Choose the Right BOP for Your Arkansas Business

Selecting appropriate BOP coverage requires careful assessment of your business risks and financial situation. Follow these steps to ensure you get adequate protection without overpaying:

Step 1: Inventory Your Assets

Create a comprehensive list of everything your business owns:

• Building value (if you own the property)
• Office furniture, fixtures, and equipment
• Computers, software, and technology
• Inventory and supplies
• Tools and specialized equipment

Calculate replacement costs, not just what you originally paid. Inflation and supply chain issues have increased the cost to replace damaged property significantly in recent years.

Step 2: Assess Your Liability Exposure

Consider how much liability coverage your business truly needs:

• How many customers visit your premises daily?
• Do you work on client property or only at your own location?
• Do clients require specific liability limits in contracts?
• What’s your total annual revenue?

Many Arkansas commercial insurance policies start at $1 million per occurrence with a $2 million aggregate limit, but businesses with higher exposure may need $2 million or more.

Step 3: Evaluate Business Interruption Needs

Estimate how long it would take to rebuild or repair your business location after a total loss, and calculate:

• The monthly revenue your business generates
• Fixed expenses that continue during closure (rent, utilities, loan payments)
• Employee payroll you’d want to maintain during downtime
• Additional expenses for temporary relocation

Most experts recommend carrying enough business interruption coverage to sustain your business for at least 6-12 months.

Step 4: Identify Required Add-Ons

Review the endorsements and additional coverages available, determining which apply to your situation:

• Do you have employees? (You need workers’ comp separately)
• Do employees drive for business? (Add hired/non-owned auto coverage)
• Do you offer professional advice? (Consider E&O insurance)
• Are you a contractor? (Look into tools and equipment coverage)

Step 5: Compare Multiple Quotes

Because OZK Insurance is a 100% independent agency, we can shop your BOP coverage across multiple top-rated insurance carriers. This competition drives better pricing and ensures you receive the coverage options that best fit your needs.

When comparing quotes, look beyond the premium price:

• What’s the deductible amount?
• Are coverage limits adequate?
• What endorsements are included?
• Does the carrier have strong financial ratings?
• What’s their claims service reputation?

Common BOP Mistakes Arkansas Business Owners Make

Even experienced entrepreneurs make insurance mistakes that can leave them underinsured or overpaying for coverage they don’t need. Avoid these common pitfalls:

Mistake #1: Undervaluing Business Property

Many business owners underestimate their property’s replacement value, often by 30% or more. They calculate based on what they originally paid rather than current replacement costs. With inflation driving up material and labor costs, a computer system purchased for $10,000 five years ago might cost $14,000 to replace today.

Solution: Review and update property values annually. Document all assets with photos, receipts, and current market values.

Mistake #2: Selecting Actual Cash Value Instead of Replacement Cost

Some business owners choose actual cash value coverage (which factors in depreciation) to save on premiums. When a five-year-old HVAC system fails, actual cash value coverage might pay only $6,000 for a system that originally cost $12,000—leaving you to cover the remaining replacement cost out of pocket.

Solution: Choose replacement cost coverage for critical assets. The slightly higher premium prevents major out-of-pocket expenses during a claim.

Mistake #3: Assuming “All Risk” Means “Everything’s Covered”

BOPs are typically written as “all risk” policies, which sounds comprehensive. However, all risk doesn’t mean no exclusions—it means the policy covers all perils except those specifically listed as exclusions.

Solution: Read your policy exclusions carefully and purchase additional coverage for excluded perils that pose real risks to your business.

Mistake #4: Not Updating Coverage as Your Business Grows

When you started your business, a $500,000 property coverage limit might have been sufficient. Three years later, after expanding inventory, adding equipment, and renovating your space, you could easily have $900,000 in assets—but you’re still carrying the original coverage amount.

Solution: Review your coverage annually, especially after making significant purchases, renovations, or business expansions.

Mistake #5: Choosing the Highest Deductible to Save Money

Selecting a $5,000 or $10,000 deductible dramatically reduces your premium, but what happens when you actually need to file a claim? If your business doesn’t have adequate cash reserves, a high deductible can create a financial emergency.

Solution: Choose a deductible your business can comfortably afford to pay out of pocket. Balance premium savings against financial reality.

How to File a BOP Claim in Arkansas

Understanding the claims process before you need it ensures you can act quickly and efficiently when a covered loss occurs:

Immediate Steps After a Loss

1. Ensure Safety First – If anyone is injured, call 911 immediately. If the incident involves theft or vandalism, contact local law enforcement and file a police report.
   
2. Document Everything – Take photos and videos of all damage before starting cleanup. Document the scene from multiple angles, capture close-ups of specific damage, and preserve damaged items when possible.
   
3. Prevent Further Damage – Take reasonable steps to prevent additional losses. Board up broken windows, cover holes in the roof, or move undamaged inventory to a safe location. Save receipts for these emergency repairs—they’re typically covered.
   
4. Contact Your Insurance Agent – Call OZK Insurance as soon as possible to report the claim. The sooner you notify your insurer, the faster the claims process begins.
   

What to Expect During the Claims Process

Your insurance carrier will assign a claims adjuster to investigate your loss. The adjuster will:

• Visit your business to inspect the damage
• Review your policy coverage and limits
• Request documentation of damaged property
• Assess repair or replacement costs
• Determine coverage and settlement amounts

Cooperate fully with your adjuster, but remember that you have rights. If you disagree with the settlement offer, you can negotiate, provide additional documentation, or request a re-inspection.

For business interruption claims, maintain detailed records of lost income, continuing expenses, and additional costs incurred during your closure period. The more documentation you provide, the smoother your claim will proceed.

Why Independent Agents Deliver Better BOP Coverage

When shopping for BOP insurance, you have two main options: working directly with a single insurance company or partnering with an independent agency like OZK Insurance that represents multiple carriers.

Independent insurance agencies offer significant advantages for Arkansas business owners:

Access to Multiple Carriers – Instead of receiving quotes from just one company, independent agents shop your coverage across numerous top-rated insurers, identifying the best combination of coverage and price for your specific situation.

Unbiased Recommendations – Captive agents work for one insurance company and can only sell that company’s products. Independent agents work for you, recommending whatever policy best fits your needs, regardless of which carrier provides it.

Specialized Expertise – Independent agents understand the unique risks Arkansas businesses face—from severe weather threats to industry-specific challenges in Northwest Arkansas’s growing economy.

Long-Term Partnership – As your business evolves, your independent agent reviews your coverage regularly, adjusting policies as your needs change and shopping your coverage at renewal to ensure you continue receiving competitive rates.

Claims Advocacy – When you need to file a claim, your independent agent advocates on your behalf with the insurance carrier, helping navigate the process and ensuring you receive fair treatment.

Get the Right BOP Coverage for Your Arkansas Business

Protecting your business with appropriate insurance shouldn’t feel overwhelming. A well-structured Business Owners Policy provides comprehensive protection at an affordable price, allowing you to focus on growing your business rather than worrying about potential losses.

Whether you’re launching a new venture in Rogers, expanding your existing business in Bentonville, or relocating to Northwest Arkansas to capitalize on the region’s explosive growth, getting the right insurance coverage is foundational to your success.

Don’t leave your business vulnerable to unexpected losses. Whether you need a comprehensive BOP or want to review your existing coverage, our experienced team is ready to help you find the protection your business deserves.