Understanding a Business Owners Policy

Like many Americans, you own a small business – one with a physical location and employing 500 or fewer individuals. Although you have fewer resources than the big companies out there, you’re still held to the same standards. For instance, if someone slips and falls on your premises, you’ll be liable.
For small businesses in particular, this and other instances can result in a major financial hit. As a preparation strategy, insurance anticipates these occurrences, assisting with legal fees, the injured party’s medical bills and preserving your assets. For companies of your size, typical commercial policies are often too costly; that’s where a business owners policy (BOP) comes in.
A BOP is more than an umbrella policy. Rather, it combines property, liability and business interruption coverage into a single policy with one rate. For you, the combination is far more convenient, financially viable and anticipates these emergencies without putting a major dent in profits.
As you shop around, think about the following points.
What’s in a BOP?
A BOP typically includes three basic types of coverage:

• Property, designed to cover your facility and any contents owned by the company or within your care or control. Businesses may opt for standard coverage or special coverage for a more comprehensive solution. As with commercial insurance, your policy can be written as a named risk, covered for only the perils listed, or open, coverage for everything unless otherwise specified.
• Business interruption, which covers you through instances such as a power outage, fire or storm that disrupts your operation.
• Liability, which has you protected in the event your company, its workers or its products cause injury or bodily harm to a third party. Your policy assists with covering any costs related to legal fees, medical bills and property damage involving the third party.

Initially, insurance carriers developed BOPs for traditional stores, but as small businesses extend over a spectrum, policies are now tailored to anticipate your industry’s specific risks. In response, you may have the option to add the following to your standard BOP:

• Computer equipment coverage
• Inland marine
• Crime coverage
• Endorsements to increase coverage limits

Limitations
Although a BOP proves to be a lifesaver for many businesses, understand your policy’s potential limitations and restrictions:

• BOPs do not always cover unique risks; most are underwritten as general policies. If your business has an extreme, more specific degree of risk, you may be steered toward a full commercial property or liability policy.
• Eligibility is based on several factors, including class of business, property value, square footage and revenue. As such, BOPs are not recommended for independent contractors and those who operate without a physical location.
• BOPs aren’t comprehensive. To anticipate a greater degree of risks, your business may need separate professional or product liability, workers’ compensation, commercial auto, employee benefits liability and liquor liability policies.

With all of these factors considered, a BOP is best for:

• A business operating out of a physical location, including your home or rented office space.
• Small businesses with some degree of theft or damage risk, even if it’s only your computer equipment or inventory.
• Any company with a risk of being sued, either by having a customer get injured at your facility or having your clients’ data stolen.

Do you need to properly insure your business or expand upon your existing BOP? To start discussing your options with an agent, give us a call at 203.439.2815.