Top small business insurance providers often consolidate three essential coverage forms into a single policy known as a Business Owners Policy (BOP):
- General liability insurance
- Commercial property insurance
- Business interruption insurance
However, a BOP isn’t confined to these primary coverages. It generally allows the inclusion of extra coverage types, enabling businesses to tailor a policy suiting their specific needs. Additional options like liquor liability insurance and equipment breakdown insurance can be incorporated. BOPs stand as a preferred choice for various small and medium-sized enterprises, including retail stores, contractors, restaurants, and wholesalers.
What’s Covered Under a Business Owners Policy (BOP)?
Small business insurance providers typically include these types of coverage within a business owners policy (BOP).
General Liability Insurance
General liability insurance offers protection against various claims that a business might face, encompassing scenarios like copyright infringement, reputational harm, advertising injury, bodily injury, and property damage.
Copyright infringement claims may arise if allegations arise regarding the unauthorized use of copyrighted material in business advertisements or other promotional materials.
Reputational harm could result from any negative statements made in interviews or across television, print, or online platforms that affect another business or business owner.
Advertising injury covers situations where your business is accused of defaming another individual, company, or business owner.
Bodily injury claims are common and cover instances where individuals are injured while at your office or store, with the policy extending to cover their medical expenses. These claims could result from incidents as simple as a customer slipping and falling.
Property damage claims involve damage to another person’s property while visiting your business premises, extending to cover damage to a client’s home or property during business-related visits. Coverage may also include damage to electronic data.
These unforeseen claims can arise despite your proactive measures. For instance, a $20,000 slip and fall claim could significantly impact your business if you lack a general liability policy as a financial safeguard. Without insurance coverage, you’ll be responsible for footing the bill for the claim, and a substantial claim could potentially lead to financial strain severe enough to jeopardize your business.
Moreover, having general liability insurance can be a client requirement before engaging in business transactions. To expand your clientele, securing general liability insurance for your business is pivotal.
Commercial Property Insurance
Commercial property insurance steps in to cover the costs of repairing or replacing a business’s physical assets when they’re lost, stolen, or damaged due to incidents outlined in your policy. This coverage extends to various aspects such as your business building, equipment, inventory, computers, tools, valuable documents, and business records.
In case of damage caused by covered incidents like fire, theft, or other issues specified in the policy, commercial property insurance can facilitate the replacement expenses for your business assets. Often referred to as business property insurance, it serves as a safety net for your business possessions.
Business Interruption Insurance
Business interruption insurance aids in recouping lost income for a business. When your business faces a situation covered by the policy—like a fire or windstorm—that prevents you from operating, this insurance compensates for the income you’ve lost during that period.
Additionally, business interruption insurance can cover the costs incurred when renting temporary space to ensure continuity in operations. It’s often referred to as business income insurance, providing crucial financial support during disruptions to your business.
Coverages Available to Add to a BOP
A business owners policy is a handy insurance choice tailored for small business proprietors. However, certain potential issues fall outside the coverage provided by a BOP. To address these, additional coverage types can be incorporated into your BOP:
Commercial Auto Insurance
Commercial Auto Insurance encompasses vehicles utilized for business purposes. Additionally, it includes hired and non-owned auto coverage, protecting you when renting a vehicle for work-related use or using your personal car for business purposes.
Commercial Umbrella Insurance
Commercial umbrella insurance extends coverage for your company beyond the limits of your standard business insurance policy, addressing issues such as damage to third-party property and accidental injuries to others. Additionally, it assists in covering legal expenses, settlements, and judgments.
Cyber Liability Insurance
Cyber liability insurance, also referred to as data breach insurance, supports your business in handling the expenses incurred due to cyber threats or breaches impacting computer systems and data. This encompasses sensitive customer data such as account numbers, credit card details, driver’s license information, health records, and Social Security numbers.
Directors and Officers Insurance
This insurance protects your company’s directors and officers if they face lawsuits from customers, employees, vendors, or others. It covers various claims, including misrepresentation of company assets, causing financial loss or bankruptcy, intellectual property theft, slander, libel, and copyright infringement.
Employment Practices Liability Insurance
Employment practices liability insurance covers expenses related to employment-related claims, like workplace harassment, slander, unlawful compensation practices, discrimination, and wrongful termination.
Equipment Breakdown Insurance
Equipment breakdown insurance assists in funding repairs or replacements for equipment that experiences sudden damage or unexpected failure. Typically, it covers instances such as motor burnout, power surges, electrical shorts, and mechanical breakdowns.
Errors and Omissions Insurance
Also known as professional liability insurance, this policy safeguards against claims arising from professional errors or oversights. It’s essential for those offering advice, recommendations, or representing the interests of others to consider obtaining errors and omissions insurance.
Home-Based Business Insurance
Insurance for home-based businesses assists in managing claims linked to property damage, employee injuries, and lawsuits specifically tailored for businesses operated from home.
Inland Marine Insurance
Inland marine insurance safeguards your business assets such as materials, equipment, products, and tools while they’re temporarily stored off-site or in transit over land.
Liquor Liability Insurance
Liquor liability insurance, also known as dram shop insurance, shields against claims of bodily injury and property damage resulting from an intoxicated individual after your business sells or serves them liquor.
Workers Compensation Insurance
Workers compensation insurance provides benefits like medical expenses and lost wages to employees affected by work-related injuries or illnesses. It’s a mandatory coverage in most states, even if you employ only one person.
Do I Need a Business Owners Policy?
Small business owners who lack the financial capacity to cover legal expenses in the event of a lawsuit or replace lost or damaged assets can benefit from a business owners policy (BOP). Ideal candidates for BOP insurance include businesses that:
- Operate from a physical location, whether a home-based setup, a store, or an office space.
- Possess assets vulnerable to theft, including cash, inventory, computers, and business furniture.
- Are susceptible to high lawsuit risks.
- Have fewer than 100 employees and annual sales under $5 million.
- Operate in regions prone to severe weather, such as hurricanes.
Businesses fitting these criteria that benefit from a BOP include manufacturers, religious organizations, restaurants, retailers, technology consultants, and wholesalers.
BOP Insurance: Cost
The typical cost of a business owners policy stands at around $57 per month.
The price of your BOP can fluctuate based on several factors:
- Industry: High-risk industries like construction often pay more for coverage compared to lower-risk sectors.
- Business Location: Areas prone to higher crime rates or severe weather might incur higher insurance costs.
- Number of Employees: Larger employee numbers can lead to increased insurance expenses. Property Value: The value of your business property affects insurance costs.
- Coverage Amount: The extent of coverage purchased directly impacts rates. Insurance Deductible: Lower deductibles usually mean higher premiums.
- Claims History: Past insurance claims can affect future premiums, with recent claims implying a higher risk profile.
Ways To Save on BOP Insurance Policies
The average annual cost of a business owners policy stands at $684. However, it’s possible to find coverage for under $600 per year, with an estimated 42% of small business customers securing such rates annually.
To save on BOP insurance:
- Consider paying annually. Insurance companies often offer discounts for upfront annual payments rather than monthly or quarterly installments.
- Opt for a higher deductible. Choosing a higher deductible can reduce premiums, though keep in mind that it means receiving less from the insurer in the event of a claim, as the deductible is deducted from the claim payment.
- Select only necessary coverage. While BOP insurance offers various add-ons, assess and choose coverage types essential for your business. For instance, if your business doesn’t serve alcohol, liquor liability insurance may not be necessary.
Additional Coverages to Consider
General Liability Insurance
Essential for trucking operations, general liability insurance covers bodily injury, property damage, and related liabilities. It shields your business from legal and financial risks associated with accidents or incidents involving your vehicles.
Commercial Umbrella Insurance
Offering an additional layer of liability protection beyond primary coverage limits, commercial umbrella insurance acts as a supplementary safeguard against catastrophic losses. It provides heightened security for unforeseen events.
Workers Compensation Insurance
Addressing the well-being of your workforce, workers compensation insurance ensures coverage for medical expenses and lost wages in the event of work-related injuries or illnesses. It is a crucial component for businesses with employees.
Errors & Omissions Insurance
Specifically tailored for professional services and advice, errors and omissions insurance shields your business from legal claims related to professional negligence or mistakes. It is vital for businesses offering specialized services.
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We specialize in a diverse array of insurance solutions crafted for businesses of any size. Our team of insurance agents is committed to tailoring policies that precisely align with the unique requirements of your business while ensuring competitive rates.
Customer satisfaction is our utmost priority, and we are dedicated to providing ongoing support to address any concerns you may have regarding your policy. Whether you’re launching a new business venture or refining your current coverage, our objective is to offer comprehensive protection. With the right insurance coverage, your business ventures are not just transactions; they evolve into avenues for success and growth.
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