Why Your Small Business Needs a BOP

Small to medium-sized businesses have more limited budgets than larger companies – yet less funding does not mean owners should cut corners with commercial insurance.

Despite the quality of your work and the safety of your facilities, incidents happen. When an injury or property damage suddenly results in a lawsuit, that’s where insurance comes into play. For small and medium-sized businesses, a BOP or business owner’s policy anticipates what could happen at a more affordable cost than individual policies.

What Is a BOP?

Businesses ordinarily purchase separate commercial policies for general liability, business interruption and property insurance. A BOP rolls all three of these into one lower-cost option that fits within your company’s budget. On a general level, you get:

  • Commercial Property: Whether you work out of your home or rent office space, this policy extends coverage to all property and equipment you use to operate.
  • General Liability: Should someone get injured on your grounds, general liability helps to pay their medical expenses and any legal fees. Beyond physical injury, general liability further extends to advertisements and claims made by your business in its marketing materials.
  • Business Interruption: Also called “business income”, this policy anticipates any interruption to operations that could slow or temporarily terminate a source of revenue. This policy extends to natural disasters and issues along your supply chain.

Benefits of a BOP

Compared to taking out each policy individually, a BOP proves to be an asset for small to medium-sized businesses for the following reasons.

It’s More Affordable

The coverage extended by a BOP should fit within your budget, without any major risks. Lacking this coverage could mean a lawsuit hurts you more financially – or forces you to shut down. Should a natural disaster temporarily pause operations, your BOP also lessens the odds you will have to permanently close.

Covers a Wide Range of Businesses

Contrary to popular belief, BOPs are not just for small businesses. Companies with 100 or fewer employees or revenues up to $5 million are generally eligible for coverage. You get insurance to keep your business afloat and protect your customers, clients and employees.

Protection Against Lawsuits

You’re confident in your services and employees but accidents do happen. If a customer suffers an injury on your grounds or you damage property while providing a service to a client, the suite of coverages offered through a BOP helps secure your financial assets.

It also allows you to assist with medical expenses, property damage or legal fees as you continue to operate and retain your staff.

While BOPs generally don’t extend to malpractice or professional liability coverage, they have your back if:

  • A third party is injured or harmed in some form on your property
  • A product you sold injures a third party in some form
  • An employee’s actions result in bodily injury or property damage to a third party

You Can Customize Coverage

Although BOPs consist of three general components, businesses all contend with specific risks due to industry, services or location. Your BOP can combine specific coverage types that would require an endorsement for an individual policy. These can include:

  • Electronic data and cybersecurity coverage
  • Computer and electronic equipment coverage
  • Accounts receivable coverage
  • Fungi and mold coverage
  • Mechanical breakdown
  • Civil authority coverage
  • Inland marine
  • Coverage for valuables
  • Merchandise spoilage

Meet and Exceed Legal Requirements

Laws often require businesses to take out general liability coverage in order to operate. A BOP helps you meet these requirements and expand your coverage with property and business interruption insurance.

However, in select instances or based on your profession, a BOP may not be enough. You may additionally be required to take out errors and omissions coverage for licensing.

Are you interested in modifying your commercial coverage or taking out a business owner’s policy? To get started, contact a HUB/Ion Insurance agent today.