Many contractors assume a business owners policy covers every major risk their business faces. The policy bundles several core coverages, which makes it appealing for new or growing operations. Over time, however, contracting work introduces exposures that stretch far beyond what a standard policy was designed to handle.
That reality leads many business owners to ask an important question: Is a business owners policy enough coverage for contractors? As contractors take on job-site work, transport tools, operate vehicles, and rely on subcontractors, coverage gaps often become harder to ignore.
What Does a Business Owners Policy Actually Cover?
A business owners policy, commonly referred to as a BOP, typically combines general liability insurance, commercial property insurance, and business interruption coverage into one package. For businesses with a fixed location and limited operational risk, this structure can work well.
Contractors often start with a BOP because it offers a cost-conscious and straightforward way to meet basic insurance requirements. The policy can help address third-party injuries, certain property losses, and temporary disruptions to business operations. Even so, most business owners policies are designed for office-based or storefront businesses rather than for companies operating on active job sites.
Where a Business Owners Policy Falls Short for Contractors
Contracting work creates risks that extend beyond the boundaries of many BOPs. Job sites change daily, tools move from location to location, and multiple parties may be involved in a single project. Many standard policies limit or exclude coverage for these exposures.
For example, tools stolen from a vehicle overnight may fall outside standard property coverage. Damage caused while performing work at a job site may also raise coverage questions if the policy does not explicitly address contracting operations. Over time, these gaps can lead to unexpected expenses that strain cash flow and delay projects.
As businesses grow, underinsurance becomes an even greater concern. We outline these challenges in our discussion of the risk of underinsurance for contractors, especially for companies expanding their services or taking on higher-value jobs.
When Contractors Need More Than a BOP
Growth often signals the need for broader protection. Hiring employees, adding vehicles, purchasing specialized equipment, or bidding on larger projects can all push a business beyond the limits of a basic policy.
At that stage, contractor insurance solutions may include contractors general liability, inland marine coverage for tools and equipment, commercial auto insurance, and workers’ compensation. Each policy addresses a specific operational risk that a BOP may not fully cover. Contractors focused on long-term growth often benefit from reviewing their insurance alongside broader business planning efforts.
Coverage works best when it reflects the contractor’s trade, job scope, and risk profile rather than relying on a standard package.
Building the Right Coverage for Your Contracting Business
A business owners policy can provide a strong starting point, but most contractors need additional protection as their operations evolve. Effective coverage considers how work is performed, where equipment is stored, and how the business plans to grow.
ISU Sine Agency works with contractors to evaluate existing policies, identify coverage gaps, and design insurance programs that align with real-world job-site risks. Reviewing coverage before a loss occurs helps contractors protect their livelihoods and move forward with confidence.
FAQ on BOPs for Contractors
Is a business owners policy enough coverage for contractors?
In most cases, a business owners policy alone is not enough. Contractors often need additional coverage to address job-site liability, vehicles, and tools.
When should contractors review their insurance coverage?
Contractors should review coverage when the business grows, adds employees, takes on larger projects, or invests in new equipment.
Can a trade company tailor contractor insurance?
Yes. Insurance programs can be customized based on the specific risks associated with each trade and type of work.
About Sine Insurance
At Sine Insurance Group, we are dedicated to providing you with custom-tailored insurance policies to protect your assets. Our comprehensive packages have been expertly crafted to serve St. Louis and the surrounding areas for the past 25 years. For more information about our products, contact us today at (855) 700-0889.