State Farm Insurance License Practice Exam

What type of policy provides broad property and liability coverage specifically designed for small businesses?

1. Business Income Policy

2. Commercial Package Policy

3. Business Owners Policy

4. Dwelling Policy

The correct answer is: Business Owners Policy

The Business Owners Policy (BOP) is specifically tailored for small businesses, combining both property and liability coverage into a single, comprehensive package. This type of policy is designed to meet the unique needs of small business owners, allowing them to protect their assets against common risks, such as property damage and lawsuits arising from business operations. Typically, a BOP covers buildings, personal property, liability for bodily injury, property damage, and even business interruption losses. It is structured to provide robust protection without requiring small business owners to purchase multiple separate policies, which can be costly and complex to manage. This tailored approach makes the BOP an ideal choice for small businesses, as it ensures they have essential coverage in place, fostering peace of mind and allowing them to focus on their operations without the constant worry of unforeseen financial liabilities.