Those “in the know” know that a business owner’s policy (BOP) can be one of the most efficient ways to kick off their commercial insurance coverage.
But exactly what is a BOP? In this article, we’ll discuss what a BOP policy covers, why you want one, and who can benefit from it.
When it comes to your business, you don’t want to miss a single detail. You purchased the right furniture and equipment, leased the perfect location, and hired the right employees. When something goes wrong, you’re on top of it.
The right level of insurance coverage is crucial to making sure that your doors stay open for years to come. And for some business, that starts with a BOP.
What Is a BOP?
A Business Owners Policy (or BOP) provides three essential types of coverage into one convenient policy. Business Owners Policies were developed (and so named) for the simple reason that encompass three types of insurance coverage that a majority of business owners need.
1. Commercial Property Insurance
When most people think of the importance of insurance claims, they’re thinking about the risks to physical property. Fire, water, and robbery are all examples of threats to physical property.
Commercial Property Insurance covers any physical property that your business owns, including (but not limited to):
2. General Liability Coverage
In this day and age, lawsuits are an ever-present risk. It’s enough to make any business owner live in fear. But with the General Liability Coverage on your Business Owner Policy, you can breathe easily.
General Liability Insurance protects your business against lawsuits alleging that you were the cause of injury and/or damage to a third party.
It’s possible (and increasingly common) to get sued for damages even if you did nothing wrong. But even if you manage to win the lawsuit, defending yourself in court racks up hefty legal fees. General Liability Coverage helps you pay for that legal assistance.
3. Business Interruption Coverage
Whether you’re cleaning up your restaurant after a plumbing leak or defending yourself in court against a frivolous lawsuit, you’ll likely have to miss out on work. If you have to close up shop for a few weeks, you’re bound to have a drop in income.
Enter: Business Interruption Insurance.
Business Interruption Coverage steps in to reimburse you for the loss of income you experience after an insurable loss. Payroll, rent, utilities, and other expenses still need to be paid, even if you can’t open your doors. But with Business Interruption Coverage, it doesn’t have to bankrupt you.
Advantages of a BOP
BOPs package a business’s most essential needs into one convenient policy. Bundling your coverage in this way typically saves you money in the long run.
In the eyes of your insurance company, the more policies you purchase, the less risky you are to them. This might not make sense to you, but insurance carriers have entire departments tasked with crunching numbers and analyzing data. If this is what they determine, that’s how they calculate their premiums.
Which Businesses Need a BOP?
BOPs are designed for businesses that carry roughly the same level of risk. So obviously, there must be enough businesses in this category to warrant an entire type of policy.
You should consider a BOP if you:
- Have physical property or equipment
- Have the possibility of being sued
- Can’t afford to lose business.
Put this simply, it’s fairly obvious that all business types can benefit from a Business Owners Insurance Policy! However, insurance carriers have their own set of standards they use to determine if a small business is eligible for a BOP.
Some insurance companies may place restrictions on the size of building they will insure, for instance. Or they may not insure certain industries. For the most part, businesses with less than 100 employees who make less than $5 million annual revenue are perfect candidates for a Business Owners Policy.
Small business owners looking to purchase a BOP should first meet with an independent insurance agent. Because they are not held captive to a specific insurance carrier, independent agents can collect multiple quotes to find a policy that fits your needs and your budget.
Customizing Your BOP
The name might lead you to believe that a BOP is all you need to protect your business, but this isn’t the case. BOPs are designed for a wide range of businesses, but every business has different needs and risk exposures, so you’ll want to customize your policy with one or more BOP endorsements.
Also known as “riders,” endorsements make additions or changes to your policy to customize the level of insurance coverage you need.
Some of the most popular types of BOP endorsements are:
- E&O Insurance
- Cyber Risk Insurance
- Inland Marine Insurance
- Commercial Auto Insurance
- Employment Practices Liability
- Workers’ Compensation
- Disability Insurance
- Health Insurance
You might also want to consider an umbrella policy to boost the coverage limits of your BOP. Talk to your insurance carrier or local independent insurance agent to see which options may be best for you.
Business Owner Policies are an affordable, efficient way to give your small- to mid-sized business the coverage it needs. By combining Property, General Liability, and Business Interruption insurance into one convenient policy, you can save money without having to miss out on essential insurance coverage.
If you’re looking for business insurance, Harry Levine Insurance can help. We’ve been in the industry for the last 35 years and have used our extensive knowledge, experience, and drive to help thousands of home- and business owners find the protection they need.