Should you buy a business owners insurance policy?
As small business owners know, there are many types of business insurance. In fact, it can be confusing. The BOP Business Owner’s Policy is a policy that has commercial insurance benefits because it combines coverages under one umbrella.
How much does business insurance cost? What is included in a BOP policy? Do you need covers that are not part of the standard BOP policy?
What is a business owners insurance policy?
Small businesses love business owners insurance for three main reasons:
- Broad insurance coverage needs are combined in one policy
- The business owner’s policy – because of this combination – saves money.
- BOP insurance combines general liability insurance and property insurance, which are the basic elements needed by business owners.
Why You Should Buy a Business Owners Insurance Policy
Small business owners cannot live without insurance. It’s an unavoidable cost of doing business. The following are examples of when BOP insurance is necessary:
- You operate from a physical location. You have equipment and/or stocks. You store data with customer information.
- You work from home. You may or may not have equipment or inventory. You store data with customer information.
- Your business activities take place on someone else’s property. For example, you are a landscaper or a contractor. You need a BOP if your business has potential risks of damaging someone else’s property – your lawn mower throws a rock through a homeowner’s window.
- Customers visit your place of business, whether it’s a physical location or your home. Customer injury is a possibility.
- It is possible that equipment failure and/or loss of inventory means loss of revenue.
What is covered by a business owners insurance policy?
Here is how BOP insurance would provide coverage. Remember that you can customize a business owner’s BOP policy with additional coverages to better suit your business purpose:
Commercial General Liability Insurance
This type of insurance covers you for damage to the property of others or bodily injury (bodily injury including medical expenses). This general liability insurance should also provide assistance with legal costs if you are sued due to customer bodily injury occurring on your property or product-related claims. General liability insurance also covers you for “public injury” – for example, you are accused of copyright infringement for an image you use in advertising. Coverage includes your legal defense costs.
Commercial property insurance
This type of insurance covers the loss of business equipment or property, whether owned or leased. This can include physical damage to the building itself, as well as items such as office furniture, inventory, and equipment. Usually, there are two types of fonts in this category – standard fonts and specialty fonts. With specialized, you can choose to extend the covered loss.
Business income insurance
In the event of property damage, equipment damage or failure, or loss of inventory, revenue insurance means lost revenue will be replaced. This type of coverage helps you stay afloat if you need to meet salary obligations, pay rent or mortgage, utilities, etc. This is often referred to as business interruption insurance.
Computer Software/Professional Services
This type of insurance covers you in the event of a data breach, compromise of customer data, failure of electronic equipment and/or software, identity theft and loss of data or valuable documents/records. related to the business. This is also called cyber liability insurance. It protects you in the event of a data breach that compromises customers’ personally identifiable information. Policies can also protect you from employee dishonesty that impacts your bottom line.
What is not covered by the BOP policy?
Unfortunately, despite the broad coverage offered by a business owner’s BOP policy, you’ll likely need additional protection from other types of insurance policies, especially if you have employees:
- Commercial Motor Insurance – Not covered by a BOP but can be added to a Commercial Insurance Policy (CPP). More on that later.
- Errors and Omissions (E&O) Insurance – Covers you for mistakes you make while providing professional services. For example, you are a surveyor and you make a mistake on the property limits. This is often called professional liability.
- Employment Practices Liability Insurance (EPLI) – If you have employees, this protects you from lawsuits brought by them for things like wrongful termination or harassment.
- Risk Insurance – Provides property coverages for outdoor commercial properties, such as fences and signage. This type of insurance covers you for damage caused by natural disasters.
- Disability Insurance – This coverage is inexpensive and covers you in the event of injury or illness.
- Worker’s Compensation – If you have employees, you must provide workers’ compensation insurance. This policy covers their medical expenses for a work-related injury.
How much does business owners insurance cost?
Many factors affect BOP costs. For example, rates vary between small and medium-sized businesses. Other factors that affect the cost include type of business, property coverage needed, location of property, type of business liability risks, whether commercial building coverage is needed, type of commercial products, optional coverages added, etc.
Typically, you can expect a cost ranging from $500 to $2,000 per month, according to figures from the Insurance Information Institute.
How to Choose the Right Business Owner’s Insurance Policy
Ready to get started with your business owner’s BOP policy? Here are some steps to follow:
- Assess your risk, ranking the liability losses covered.
- If you run a business from your home, check your homeowner’s insurance policy or tenant’s insurance policy to see what’s covered.
- If you have employees, list any additional policies you’ll need, such as workers’ compensation and EPLI.
- List the assets of the business (equipment and inventory) and calculate a dollar amount.
- Estimate how long it would take you to recover from a loss of equipment or inventory.
Ask about disability insurance. You may need to have it to get a BOP.
How to Get BOP Insurance
- Gather all of your information so you are ready to contact an insurance company.
- List the coverages you need, especially any additional coverages that fall outside the BOP umbrella.
- Before calling a local broker, insurance company or agent, network. If you are a member of your local chamber of commerce, start asking your contacts questions. Discover the choices other business owners have made – those running the same type of business or operating in your area. Which insurance company do they recommend? Is there an insurance company name that is most frequently rented?
- Contact each insurance company and make comparisons. Don’t just compare by price – compare by coverage too.
- Compare the “second umbrella”. The BOP is an umbrella for liability and ownership. An insurance company can bundle your BOP and supplemental coverages. Make sure the company has policies for all the types of coverage you need. Consolidating policies with one carrier should save you money.
What is the difference between General Liability Insurance and Business Owners Policy?
The BOP includes general liability as well as property/equipment protection, business interruption insurance, and data loss/data breach protection.
What is the difference between a commercial package policy and a business owner policy?
Commercial insurance policy is commercial insurance that includes general liability and property. What is different is what can be added to the RPC.
With CPP, you can add commercial vehicles to a commercial auto insurance policy. You can also add a cover called Inland Marine. Inland Marine Provides coverage for items that are in transit on the ground (inland).
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