What is not covered under a BOP?
A Business Owner’s Policy (BOP) generally does not cover professional liability, employee injuries like workers’ compensation claims, or damages from floods and earthquakes. Additional coverage or endorsements are required for these risks.
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Complete Guide to BOP Exclusions
Why This Question Matters for Colorado and Utah Residents
Understanding what a Business Owner’s Policy (BOP) does not cover is just as essential as knowing what it does. Colorado and Utah businesses face unique risks—from dramatic hailstorms to wildfires and flash floods—that often require extra protection beyond a standard BOP. Missing these exclusions can put your business and livelihood at unnecessary risk.
- Unpredictable Weather Risks: Colorado ranks #2 nationally for hail claims, and Utah’s wildfires and flash floods create exposure that a basic BOP won’t address.
- Legal and Employee-Related Claims: Professional liability, employee injuries, and employment disputes require separate policies, which many small businesses overlook until faced with a claim.
- Strict Policy Language: Both states require explicit exclusions for perils like flood and earthquake, and business interruption coverage must be specifically listed and fit your revenue profile to be effective.
What Most People Get Wrong
Many Colorado and Utah business owners assume that a BOP is “comprehensive,” only to discover exclusions the hard way. For example, 42% of businesses in the region underestimate flood risk—especially after wildfire seasons, when burn scars increase flash flood exposure.
Another common misconception: believing workers’ compensation or professional errors are bundled into a BOP—when in reality, they are never included and require separate coverage.
The Complete Picture
A standard BOP conveniently bundles important protections like property, general liability, and business interruption insurance, but critical risks remain excluded unless you add tailored endorsements or separate policies. Not covered under a BOP:
- Professional Liability (errors in professional services—such as consulting, architecture, advice, tax prep)
- Workers’ Compensation (injuries or illnesses suffered by employees on the job)
- Flood, Earthquake, and Wildfire (in many cases)—these require specific policies or endorsements, particularly relevant in high-risk zip codes in Boulder, Fort Collins, Salt Lake City, and the mountain regions
- Health and Disability Insurance for owners and employees are never part of a BOP
- Intentional Acts, Fines, and Criminal Penalties
It’s crucial to work with a local agent who understands regional claim patterns and weather risks. In Colorado, for example, hail can cause $20,000+ in damage in an afternoon, but a standard BOP won’t pay if flooding accompanies the storm. Utah’s growing wildland-urban interface means fire is now excluded in certain areas unless specifically endorsed.
Smart business owners regularly review property values and risk exposures, as nearly 67% of businesses have gaps in business interruption or special-coverage limits. Our role as your advisor is to clarify these details up front, so you’re never caught off guard by an uncovered event.
Making the Right Decision for Colorado and Utah Residents
Question 1: Have you addressed all your business’s unique risks outside your BOP?
Every business has exposures that a BOP won’t touch. Think strategically:
- Do you provide consulting, design, tech, or professional advice? Consider professional liability (E&O) insurance.
- Are you in a region susceptible to floods, wildfires, or earthquakes? Specialized coverage is available and essential.
- Do you have any employees? Workers’ compensation is required by law—even one part-time worker in Colorado or Utah triggers this need.
Question 2: Is your business interruption coverage realistic and current?
Does your BOP’s business interruption coverage actually reflect your monthly revenue and expenses? Many policies fall short as your business grows or if you expand to multiple locations. Review this annually, especially if you’ve added staff or revenue streams.
Question 3: Are you working with a regional agent who understands local risks?
Local expertise matters in the Mountain West. FoCoIns advisors know when hail season peaks, where floodplains have shifted after wildfire, and which endorsements truly matter in Fort Collins, Denver, Salt Lake City, and beyond. As your partner, we proactively review exclusions and help you fill the right gaps before you ever need to file a claim.
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Real World Examples
Case Study: Main Street Bakery in Fort Collins Faces Flood Exclusion
Background: Jenny owns a busy bakery on Harmony Road in Fort Collins. She has a standard BOP covering property and liability for $350,000 in assets. Her monthly premium is $95/month ($1,140/year).
Coverage: Property, general liability, equipment, and limited business interruption—but no flood endorsement.
Monthly Premium: $95/month ($1,140/year)
The Incident: During a summer thunderstorm, severe runoff from a nearby burn scar led to flash flooding. Water rushed into Jenny's storefront, ruining the flooring and equipment. Her insurer quickly denied the $42,000 claim, citing the BOP's explicit flood exclusion. Jenny had to tap savings and secure a small business loan to keep the bakery running. Afterward, she purchased a separate flood policy for peace of mind.
Total Claim Cost: $42,000 (water remediation, equipment replacement, lost revenue)
Jenny's Cost: $42,000 out-of-pocket—because she misunderstood her BOP's limitations.
"I thought my policy covered most disasters. The experience taught me that 'not covered' can mean everything. I'm grateful for the lesson, but wish I’d learned it a different way."
Case Study: Marketing Agency in Salt Lake City and the Workers' Comp Surprise
Background: Tom runs a small marketing agency downtown with three employees. His BOP covers $100,000 in equipment and liability. His monthly premium is $68/month ($816/year).
Coverage: Property, general liability, and some offsite laptop protection—but no workers’ comp.
Monthly Premium: $68/month ($816/year)
The Incident: One of Tom’s employees slipped and broke her ankle on the office stairs. The claim was denied under the BOP—worker injuries are not included. State law required Tom to pay several thousand dollars in medical costs and state penalties for not having workers’ compensation coverage.
Total Claim Cost: $8,600 (medical bills, fines, lost productivity)
Tom's Cost: $8,600—because workers' comp wasn't included in his BOP.
"I learned quickly that basic doesn’t mean complete. Now I always ask: what am I missing in my coverage?"
Case Study: Boulder Design Firm’s Professional Liability Wake-Up Call
Background: Rosa operates a design studio near Pearl Street, Boulder. She has a BOP providing $500,000 building coverage and $500,000 liability. Monthly premium: $130/month ($1,560/year).
Coverage: Property, general liability, some business interruption—but no professional liability endorsement.
Monthly Premium: $130/month ($1,560/year)
The Incident: A client claimed her team made a critical error on a project, resulting in substantial losses. Because professional liability (E&O) was not included in the BOP, the claim was denied, and Rosa paid for legal defense and settlement costs herself.
Total Claim Cost: $19,000 (legal fees and partial settlement)
Rosa's Cost: $19,000—due to lack of E&O protection.
"Not every risk is obvious—and my agent helped me see the value of asking what’s excluded, not just what’s included."
Avoid These Common Mistakes
Mistake #1: Assuming Flood, Earthquake, or Wildfire Are Covered
What People Do: Many business owners in Colorado and Utah believe a BOP covers natural disasters like floods, earthquakes, and sometimes wildfire.
Why It Seems Logical: The BOP feels "comprehensive," and the policy language is complex. Plus, these risks seem like obvious business threats—so they should be covered, right?
The Real Cost: For example, after the Marshall Fire in Boulder County, dozens of businesses faced $85,000–$200,000+ of fire or post-fire flood damage that was not covered due to policy exclusions. Those without proper endorsements were forced to pay out-of-pocket or close for good.
Smart Alternative: Review your location’s risks each year and ask about special endorsements. At FoCoIns, we ensure you understand exactly what your policy excludes and help you secure tailored coverage for region-specific hazards.
Mistake #2: Believing Employee Injuries Are Covered by a BOP
What People Do: Small businesses often assume their BOP protects against on-the-job injuries or illnesses.
Why It Seems Logical: The BOP protects property and liability—shouldn't that extend to employees?
The Real Cost: State law in both Colorado and Utah mandates workers’ compensation for even one employee. Business owners caught without it pay all medical expenses plus penalties (often $5,000–$30,000 after a single incident).
Smart Alternative: Double-check your policy and state requirements. We’ll help you find affordable, compliant workers’ comp coverage so you avoid regulatory surprises and unexpected bills.
Mistake #3: Ignoring the Need for Professional Liability Coverage
What People Do: Owners assume their business's errors, advice, or design work are protected by general liability in a BOP.
Why It Seems Logical: General liability covers many risks, so “errors and omissions” might seem included.
The Real Cost: A single claim for professional error—even a minor miscommunication—can result in $10,000–$50,000+ of legal fees or settlements, none of which is paid by a general liability BOP.
Smart Alternative: FoCoIns reviews your professional risk factors and makes sure you have the industry-specific coverage you need, so you’re protected well beyond the basics.
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