Business Owner Policy

Everything Your Business Needs

It takes one unfortunate event to shutter your business. According to the Federal Emergency Management Agency, 40-60% of small businesses fail following a disaster. Smaller companies are even more at risk, as 90% of them fail within the year following a disaster. But you can better prepare with a Business Owners Policy (BOP). Therefore, a BOP takes care of your business’ financial health after the event of loss.

In this article

Debunking the Myth

Myth: A general liability policy will cover losses due to damages to property caused by an unfortunate event.

Reality: Your general liability insurance only covers losses that you or your employees cause to a third party. However, does not cover damages to your property. Nevertheless, a BOP covers such losses to your property and that of others, keeping your finances sound in the process.

What Is a Business Owners Policy?

A BOP is a bundled insurance package designed for small and medium businesses. Generally, a standard BOP covers property damages, general liability, and losses due to business interruptions. However, you can customize your bundle and pay for the coverages that your business needs most.

How Does a Business Owners Policy Work?

Consider this example: Your office building catches fire. Then shortly after, the fire burns a unit of the office building, bringing operations to a halt. Unfortunately, the fire also damages a client’s car parked in the office area. Finally after a month, you arranged a temporary workspace to resume operations. But you are having to pay rent for the new space on top of your existing space.   

You’ll be amazed by what your BOP covers during such a crisis. A BOP covers losses to your properties as well as to that of third parties. In this case, BOP provides compensation for repairs to your office building, furniture, etc. Additionally, it covers the customer’s damaged car. What’s more, a BOP covers losses due to business interruption. Adding to your delight, a BOP also pays for rent expenses for temporary workspaces.

Are you looking for a policy to cover multiple risks in one package? Get personalized business owners insurance quotes from our wide range of carriers today.

What Does a Business Owners Policy Include?

The best thing about a BOP is that you can customize the policy package to fit your needs. Moreover, you can purchase the policy as your budget permits. Above all, a standard BOP includes:

  •  Commercial property,
  • General liability, and
  • Business interruption insurances.

 However, below are the coverages you may want to include in your BOP: 

Property Insurance

Commercial property insurance covers your business from losses to your commercial properties. For example, the building, furniture, documents, etc. Furthermore, the insurance covers building structures and content owned by the insured company. Moreover, it compensates for repairs and replacements if your property is damaged, lost, or stolen.

General Liability Insurance

General liability insurance provides protection when your product or your employees injure a third party. Moreover, the coverage extends to the third party’s properties, in case of damages.

Business Interruption Insurance

Business interruption insurance covers income loss when the business operation is disrupted by covered perils. The covered perils can be fire, theft, vandalism, or others.

Cyber Liability Insurance

Cyber liability insurance indemnifies your company from cyber risks. It covers you from the liability of data breach or data loss due to cybercrimes. Moreover, these crimes can be malware, Distributed Denial of Service (DDoS) attacks, ransomware, and many more.

what is business owners policy insurance

Commercial Auto Insurance

Commercial auto insurance covers your company vehicles in case of accidents or any insured events. It also covers your employees. Please note that a personal auto policy does not cover any losses to vehicles used for commercial purposes.

Workers Compensation Insurance

According to the Congressional Research Service, workers compensation insurance is mandatory in all states, except Texas. Moreover, the insurance covers expenses for disease, disability, or death of employees at work.

Professional Liability Insurance

Professional liability insurance covers defense and settlement costs due to lawsuits against your business. Furthermore, it covers costs arising from errors, omissions, malpractice, and negligence.

Inland Marine Insurance

Does your business operation include transportation of materials, products, or equipment via trains or trucks? If yes, consider including inland marine insurance in your BOP. It covers losses to cargo while transporting or temporarily warehousing.  

These are only a few of the coverages you can include in your BOP. You can add other coverage such as commercial umbrella, flood insurance, event insurance, and so on. Hence you should talk to your insurance agent and decide the best package for your business.

Are you looking for a policy to cover multiple risks in one package? Get personalized business owners insurance quotes from our wide range of carriers today.

What Are the Common Endorsements?

Endorsements help you personalize your BOP. It helps to add, modify, or remove coverages to better suit your unique business needs. Therefore, some common endorsements that you may want to consider:

  • Additional insured  
  • Computer equipment and gadgets  
  • Equipment breakdown  
  • Accounts receivable  
  • Hired/non-owned auto  
  • Medical and dental office  
  • Fine arts and valuables  
  • Earthquake  
  • Are There Any Exclusions? 

    As vital as it is for you to understand the various available BOP coverages, you should know the exclusions too. Here are the perils that your standard BOP does not cover:

    • Pollution  
    • Nuclear hazard 
    • An explosion of engines, boilers, or other equipment  
    • Decay, rust, or corrosion  
    • Military actions  
    • Ordinance of law

    Apart from these, there are other exclusions such as power failure, loss of market, wear and tear, etc.

    Cost of a Business Owners Policy 

    Several factors influence the cost of a BOP including:

    Coverage Limits

    Usually, the coverage limit of a BOP for a small business is $2 million. It compensates up to $1 million per claim and $2 million over the lifetime of the policy. Additionally, the more the coverage, the higher the cost of insurance.

    Industry

    High-risk industries are charged a higher premium. Such industries are construction, manufacturing, health services, etc., Therefore, the greater the risk, the higher the premium.

    Claims History

    A higher claims history suggests higher risks. Hence, businesses with frequent claims pay a higher premium than those with no claim history.

    how much does business owners policy insurance cost

    Business Size

    The number of employees and revenue determines the size of your business. Therefore, you may require more comprehensive coverage depending on its size.

    Property Details

    If the properties in your business are high-valued, they require greater coverage. Similarly, if any property you want to insure is challenging to replace, the BOP cost is more likely to increase.

    Business Location

    Business location significantly impacts your insurance cost. For example, if your business is located in a high-risk flood area, you will need to pay a higher premium.

    Replacement vs. Actual Cash Value

    Replacement value is the compensation amount equal to the cost of replacing damaged properties with new ones. Under actual cash value, you get reimbursement after factoring in depreciation of the property. Replacement value insurance costs higher than an actual cash value policy.

    Are you looking for a policy to cover multiple risks in one package? Get personalized business owners insurance quotes from our wide range of carriers today.

    Is a Business Owners Policy Necessary?

    There is no state that requires businesses to have a BOP. However, certain insurance policies for businesses are required. For instance, workers compensation and commercial auto insurances are compulsory in majority of the states. Instead of taking separate policies, you can bundle them under a BOP. As such, you will get insurance at lower prices.

    In its regular dealings, a business faces potential risks. Such risks are damages to a building, business interruptions, data losses, litigations from a third party, and so on. You never know when a disaster might hit your business. Therefore, the best way to deal with such unforeseen events is to manage risks beforehand through a BOP.  

    How Can I Choose the Best Business Owners Policy?

    Choosing the right BOP can be overwhelming for two reasons:

    • You may not fully realize your business needs.
    • There are many available coverage options flooding the market.

    Handy tips below will give you a head start.  

    Understand Your Business Needs

    First and foremost, assess the potential risks of your business. After that, see if your office building is located near a gas station or in a high flood-risk area? Additionally, identify any patterns of data loss, cybercrime, or any other risks your business is susceptible to.

    Shop Business Owners Policies

    The more you know about a policy, the better. Above all, talk to an insurance agent or surf through insurance providers’ websites. Learn about the various policy options available to you. Additionally, you can get quotes online to get an idea of the cost.

    Evaluate Your Options

    To evaluate alternatives, you can consider the following:

    • Types of losses covered by a BOP
    • Alignment of insurance coverages to your business needs
    • Coverage amounts and deductibles
    • Premium amount
    • Credibility of the insurance provider
    how much is business owners policy insurance

    Contact an Insurance Agent

    Insurance agents are the experts of the insurance industry. They have broader networks with insurance carriers. Hence, your insurance agent can provide you with a BOP at great rates. The intricate terms in an insurance contract can be tricky. With the help of an agent, you can make an informed decision.

    Keep Prices at Check

    Filter the risks you want to cover. Furthermore, remember that you don’t need to cover all the risks. That will only cause the premium to soar. Decide the significant risks and their chances of causing a loss to your business. Then, talk to your insurance agent and bundle those coverages in your BOP.

    Adapt to Changing Needs

    Growth in your business or changes in environmental factors may introduce new risks. Monitor the changing needs of your business. Moreover, see if you need additional coverage or need to discontinue existing coverage.

    Are you looking for a policy to cover multiple risks in one package? Get personalized business owners insurance quotes from our wide range of carriers today.

    When can I request endorsements?

    Amazingly, you can request endorsements at any time. Add endorsement while shopping for a new policy, renewing the existing one, or at any point in your ongoing policy. Talk to your insurance providers. They will do the rest.

    What do you mean by named and open perils?

    Perils refer to causes of loss. A named-peril is explicitly mentioned in your insurance contract. It can be fire, lightning, vandalism, falling objects, etc. Your insurer does not cover any losses due to perils not mentioned in the policy.

    On the other hand, in case of open peril, your insurance covers all reasons for losses except for those explicitly excluded. Usually, standard exclusions are flood, seepage, earthquakes, fungus damage, etc.

    What are the coverage limits of a BOP?

    The coverage limits for each element of a BOP differ:

    • A general liability insurance limit is categorized in either per occurrence or per year limits. Moreover, a per occurrence limit is the maximum amount paid out per covered event. A per year limit is the maximum amount paid out annually.
    • A commercial property insurance limit depends on the value of your company’s property.
    • A business income insurance limit is calculated by adding net profit and any fixed expenses incurred.
    Does my BOP cover accidents that have occurred on or in my business premises?

    Your BOP covers financial losses due to lawsuits brought by a third party. Suppose a customer slips inside your business premises (without anyone’s fault). The customer proves that they got hurt inside your business and sues you. Yes, that is considered a fair lawsuit. In such cases, your BOP will cover the expenses of dealing and settling the lawsuit.

    If I have a business owners policy, do I need to purchase liability insurance or property insurance separately?

    No, you don’t have to purchase liability or property insurances separately, if you have BOP. BOP is actually a bundle of those policies.

    Does BOP provide coverages against social media risks?

    The general liability insurance in your BOP covers advertising injury. For any lawsuit filed against you for copyright or brand infringement, BOP covers you.

    Who is covered by the business owners policy?

    BOP is mainly for:

    • Businesses and employees
    • Parties of a contract
    • Suppliers
    Can I combine other entities on my insurance policy under named insured?

    If you have similar ownerships and operations, you can combine other entities as named insured. Additionally, it is advisable to contact the insurance advisor for the same.

    Does a business owners policy have a deductible?

    BOP has 3 components and the need of deductibles can best be desribed as following:

    • The liability component of the policy doesn’t have a deductible.
    • The property component of the policy has a deductible. The higher the deductible, the lower your insurance premium.
    • The business income component of the policy doesn’t have a deductible. But it has a waiting period of 24-72 hours. The insurance company will not compensate for losses incurred during the waiting periods.
    Is it necessary to add a coinsurance clause to BOP?

    Consider a coinsurance clause if your property insurance limit is lower than the actual value of the property. The clause will help you reduce the claim payment to your company. Moreover, people commonly include a coinsurance clause.

    Do all companies qualify for business owners policy?

    Not all companies qualify for a BOP. Any low-risk industry business with up to100 employees and annual revenue up to $1 million can qualify for a BOP. —Insurance Information Institute

    Are you looking for a policy to cover multiple risks in one package? Get personalized business owners insurance quotes from our wide range of carriers today.

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