One of the critical needs for every business owner is choosing the right business insurance. Too much insurance means money spent that could have been better spent elsewhere. Too little insurance, or the wrong insurance coverage, can mean leaving your business unprotected and open to risk. Choosing appropriate insurance coverage is key to ensuring that the business remains lucrative, especially if any of those risks become reality. A business owners policy (BOP) takes some of the guesswork out of choosing insurance and can make it easier to safeguard your business.
A BOP bundles several types of coverage in one package, similar to the way a homeowner’s policy works, but is designed for small and midsized businesses. Not only does it help businesses cover all their risks, but it can also save money, since the bundle of services typically costs less than the cost of all the individual coverages combined. A BOP bundles several types of coverage in one package, similar to the way a homeowner’s policy works, but is designed for small and midsized businesses.
BOPs are packaged for businesses that generally face the same type of risks. For example, a restaurant BOP can be designed and packaged differently than a manufacturing BOP. Typically, a BOP covers a business’s equipment and merchandise while also covering everything that a general liability policy covers. It also covers equipment, furniture and supplies in up to five separate locations, including rented and leased equipment.
What’s Included in a Business Owner’s Policy?
A BOP generally combines the following types of coverage in one convenient bundle:
- Commercial property insurance—Covers losses to property from common perils. It also covers office equipment, furniture, inventory, machinery, raw materials, computers and anything else that is vital to business operations.
- General liability insurance—Covers a company’s legal responsibility for any harm it may cause to others, up to the policy limit. It also covers attorney fees and medical bills for anyone injured by the company.
- Business interruption insurance—Reimburses for loss of income if a covered disaster interferes with the successful operation of the business.
What’s Excluded from a Business Owner’s Policy?
Although a BOP is a convenient insurance option for small to midsized business owners, it does not cover professional liability, auto insurance and workers’ compensation. Employee life, health and disability coverage is also excluded. For those exclusions, business owners can purchase separate insurance policies. Other examples include the following:
- Crime coverage—Although it is minimal, crime coverage can be added to a BOP to cover losses as a result of crime, such as employee dishonesty and computer fraud. Typical crime coverage ranges between $1,000 and $5,000.
- Data breach coverage—This coverage is commonly added to BOPs to help remedy the following losses resulting from data breaches:
- Notifying impacted individuals
- Hiring crisis communication consultants
- Defense and settlement costs from associated lawsuits
- Replacement of lost income
- Extortion and ransom payments
- Errors and omissions (E&O) coverage—Businesses that provide services for a fee can be sued by customers who claim that they were harmed because the business failed to perform its job properly. E&O coverage pays for any judgment for which the insured is found legally liable, up to the policy limit. It also covers legal defense costs.
Who Should Consider a Business Owner’s Policy?
Businesses that have the following characteristics are ideal candidates for a BOP:
- Operate in a physical location, whether home-based or outside the home
- Have assets that can be stolen, including products, cash, furniture and digital property
- Are at a high risk for lawsuits
- Employ less than 100 employees and have less $5 million in sales
The following types of businesses frequently purchase BOPs to protect from losses not covered by general liability insurance:
- Religious organizations
- Technology consultants and solutions providers
What Types of Businesses are Eligible?
Small to midsized businesses need to meet specific criteria to be eligible for a BOP. When determining eligibility, insurers consider factors that include the type of business, size of its primary location, class of business and revenue.
Premiums for BOP policies are based on eligibility factors, as well as financial stability, building construction, security features and fire hazards.
How Can I Learn More About BOP’s?
When purchasing business insurance, it is important to obtain the right coverage and the right amount. The business insurance specialists at Roper Insurance can help you determine what insurance coverages your business needs, and whether a Business Owner’s Policy is the right package for you. For a free insurance review, and information on Business Owner’s Policies, contact a Roper Business Insurance specialist today by email at [email protected] or by phone at 303-721-1145.