You got into business to provide support to your customers, not to spend hours wrapping your head around coverage for your operation. Thankfully, there’s a standard package that takes care of most business needs. Business comes with risk, but a business owner’s policy provides basic coverage for some of small business’ most common exposures.
What is a Business Owner’s Policy?
A business owners policy (BOP) is actually a bundle of the three most common policies carried by small businesses: general liability insurance, commercial property insurance, and business interruption insurance. We’ve covered each of these policies in detail in past posts, but here is a quick refresher:
General Liability Insurance
General liability insurance, also called business liability insurance or commercial general liability insurance, provides coverage if a non-employee injures themselves or has their property damaged either at your business site or as a result of your business operations. This coverage includes obvious items like personal injury and physical damage to property, as well as some less obvious items like slander and copyright infringement.
Commercial Property Insurance
Commercial property insurance provides coverage for the “stuff” that makes your business work. A law firm might take out a commercial property policy to cover its furniture, records, and computers; a contractor to protect their tools, lumber, and workshop; and a restaurant to insure their product, kitchen equipment, and dining area furnishings. The more equipment critical to your business operations you have, the more important finding commercial property insurance is.
Business Income Insurance
Business income insurance, also called business interruption insurance, provides coverage for profits lost due to covered events and can help cover your payroll expenses, rent or mortgage, utilities, taxes, and even the cost of moving to a temporary location. Think about how your business would cope with a fire that closed down your primary location, business income insurance would help ensure that you don’t lose the revenue you need to recover and move on.
Why these three policies?
While other policies may be common, exposure to risk via the loss of critical property, liability, or lost revenue due to crisis are almost universal to small business, as almost all interact with customers directly, rely on equipment, and would have a difficult time moving operations should a fire or other disaster close down their place of operations. This is less true of other policies, however common they may be. Errors and omissions insurance, for example, provides coverage for real estate agents, attorneys, medical professionals, brokers, and other practitioners who provide professional advice to their clients, but is generally unnecessary for retailers and restaurateurs.
Who needs a BOP?
BOPs are meant for small businesses: usually with less than 100 employees, operating in low-risk industries, and pulling in revenues of under a million dollars. Larger businesses and businesses working in high-risk industries can purchase similar coverage but will likely have to buy their policies separately.
The following are just a few indications that your business would benefit from a BOP:
· Customers or clients visit your place of business.
· You have equipment critical to your business operations that would be financially difficult to replace.
· You publish on social media or take other measures to advertise your business.
· You would have a difficult time moving your operation if your place of business became unusable.
Options for Additional Coverage
The three policies commonly bundled in a BOP are just the beginning. Business owners can customize their coverage with a number of endorsements to customize coverage to their industry, setting, and operational needs. This additional coverage usually costs less when purchased as a rider (or endorsement) on a BOP, as compared to purchasing stand-alone policies.
The list of possible endorsements for a BOP is vast, but errors & omissions, workers compensation, and commercial umbrella coverage are common choices.
How to Purchase a BOP
BOPs are not one-size-fits all packages, and most business owners would benefit from the assistance of a professional insurance agent when making this purchase. The independent agents at Moreland insurance can help you to evaluate your coverage needs, find the appropriate BOP, look for necessary endorsements, an