Business Owners Policy (BOP)

A BOP policy combines the two main categories of insurance for businesses: liability and property. Rather than having multiple policies to cover real property, insurance for loss of business due to an emergency situation, comprehensive liability and more, a small business has the option to combine all coverage into one policy. Many business owners find that having one policy simplifies coverage for these major areas.

BOP insurance includes three common insurances required or encouraged for conducting business:

• General liability
• Business Interruption
• Property

General liability insurance covers legal disputes due to any property damage or physical injury caused by your business operations, such as errors, defective goods or issues with installations. It might also cover accidents that occur while on your property. However, it does not cover injury to your workers, which is included in workers’ compensation insurance.

Business interruption insurance provides the estimated income you lose when your business must shut down due to a natural disaster, such as a massive storm or tornado, as well as a fire. Some policies also cover the additional expense of working out of another location while your permanent location undergoes repairs.

As its name suggests, property insurance covers your physical property. This includes any real estate your business owns and any contents, such as furniture and equipment. There might also be options for those who lease their business property.

Although it might appear as though this type of insurance is a package deal providing comprehensive insurance for business, there are some key areas not included:

• Automobile
• Professional Liability
• Workers compensation

Businesses that own vehicles for professional use need to purchase adequate automobile coverage for those purposes. General liability insurance does not cover all potential issues, especially for businesses providing a service. Professional liability provides additional protection against claims or damages arising from services you provide. Any insurance protecting you and your employees, such as health, disability and workers compensation, also need to be handled separately from your business policy.

If your business is in need of any of these types of insurance, then you would need to work with your insurance agent to find the best option for you.

Although many companies rely upon this type of insurance policy for their business, it is not the best option for every business. Businesses that have no property would not benefit from the combination policy that includes property coverage. However, even if you lease your property, you still might benefit from the policy to help cover your furniture and equipment. Most businesses need some type of general liability insurance, but not all need the additional protection for their property and to cover any disruption to their business.

Although larger businesses also benefit from this type of protection, they might find that having a more customized policy through buying separate policies might work best for them. Small businesses with unique risk factor might also require separate policies rather than a package deal. If you own a business, be sure to inquire about BOP insurance with your agent to see if you are a good candidate for it.

As with most insurance policies, a business owners policy is completely customizable so that you can have the coverage you need for your business. For example, it is possible to include your data if you have concerns about the impact of losing your company’s data. Your agent will work with you to ensure that your policy covers the appropriate value of your real property as well as coverage for any profit losses that might ensure in the face of a disaster, including data loss. Furthermore, you can work out whether you need standard property insurance or need a more comprehensive policy.

You can also choose how much liability you need based on your business’ risks, such as whether clients come to your property, what type of goods and/or services you provide and the reliability of your staff members.

If you feel that your company would benefit from this type of insurance, contact your insurance agent today to discuss the option. Before you do, gather any current policies you might have for information. It is also beneficial to have current appraisals of your real estate, equipment, furniture and other property. Consider what other potential problems might ensure, including what type of lawsuits for which you are at risk. The more information you have prior to contacting your agent, the better they can customize a policy for you.

During this discussion, you can ask for quotes for individual policies and the combined policies in the BOP policy to ensure you get the best coverage for the lowest price. Remember to consider factors such as the coverage and deductibles in addition to the premium when comparing policies. Finally, discuss additional policies you might need with your agent, such as workers compensation and professional liability. Although these policies might be separate, you can generally work with the same company and agent to prepare the comprehensive coverage your business requires.

To recap, business owners insurance is basically a package deal that incorporates property insurance, liability insurance and business interruption insurance. There are other policies that companies might need in addition to these three. You have the ability to customize the coverage to protect what your business needs protecting. With the right coverage, you reduce your risk of your business failing due to a massive storm, lawsuit or other disaster.