INTRODUCTION

The American Association of Insurance Services (AAIS) Businessowners Policy (BOP) offers a coverage model similar to that of homeowners insurance, packaging and pricing insurance for eligible types of businesses. By selecting an insurance amount for buildings and/or business personal property, policyholders automatically trigger a broad set of additional coverages. This approach results in a comprehensive package policy with a single premium. The AAIS BOP serves as an alternative to traditional commercial package policies and forms to insure eligible businesses.

ELIGIBILITY

The following is a summary of eligibility criteria for the AAIS Businessowners Policy:

Most retail businesses with up to 35,000 square feet of total floor area and $6,000,000 in annual sales per location.
One-to four-family dwellings rented to others, small to medium sized apartment buildings, condominiums, and offices.
A limited number of service/processing classes.
Some wholesale operations, self-storage mini-warehouses, convenience stores, and restaurants.
Bed and Breakfast dwellings
Motels
Cooking exposure risks are eligible but subject to a different rating approach.
Alcoholic beverage sales are subject to a limitation percentage based on total sales.
Manufacturing and contracting businesses are generally not eligible.

Individual insurance companies may file their own deviations related to classes and eligibility.

Related Article: AAIS Businessowners Policy Eligibility

POLICY MAKE UP

The AAIS Businessowners Policy consists of the following:

BP 0100–Businessowners Standard Policy; or,
BP 0200–Businessowners Special Policy

BP 0010–Businessowners Declarations

o Any supplementary declarations or schedules

Related Article: BP 0010–Businessowners Policy Declarations

BP 0734–Lead Liability Exclusion (Mandatory)
BP 0798–Exclusion – Data Breach Liability (Mandatory)
BP 0816–Policy Amendatory Endorsement (Mandatory)

Related Article: BP 0816–Policy Amendatory Endorsement

Policy Cover Page or Jacket. Individual insurance companies design this form for their own purposes. It may include a table of contents or index to meet the requirements of some states.
State amendatory endorsement(s)
Any optional endorsement(s) included in the policy

COVERAGES

There are two different AAIS Businessowners Policies:

BP 0100–Businessowners Standard Policy (named perils)
BP 0200–Businessowners Special Policy (direct physical loss or damage except where excluded or limited)

Liability coverage is identical in both policies. The perils covered section is the most significant difference between the policies, but there are other minor differences in buildings, business personal property, and available optional coverages.

ENDORSEMENTS

Endorsements allow for the customization of the AAIS BOP to address specific situations. Its broad appeal has resulted in the introduction of various endorsements that enhance coverage for particular circumstances. Additionally, some endorsements are designed to limit coverage, ensuring it fits the specific risks faced by the insured.

Just as tailoring a suit ensures a perfect fit, attaching the appropriate endorsement ensures that the coverage meets the needs of the insured.

UNDERWRITING

Underwriting the AAIS BOP is similar to the process for any commercial package policy. The key aspect of underwriting this policy is ensuring that the risk is accurately classified and that the classification meets eligibility requirements. The BOP is an excellent option when it aligns with a client's needs. However, it may not be suitable if the client's needs exceed the coverage provided or if those needs are not adequately addressed by the policy.

RATING

The rating procedures for the AAIS BOP are precise and require specific steps to be performed in a particular order. It is essential to fully understand the expectations and the applicable rating method.

Related Article: AAIS Businessowners Policy Rating Considerations