A Business Owner’s Policy can be one of the simplest ways to start protecting your business.
Here’s what bop insurance usually includes, who it fits best, and how to tailor it.
When it comes to your business, you don’t want to miss a single detail. You bought the right equipment, picked the
location, and hired the right people. And when something goes wrong, you’re used to being the one who fixes it.
BOP insurance can help with that, too. A Business Owner’s Policy (BOP) bundles a few foundational coverages that
many small to mid-sized businesses need, all in one convenient policy.
But how much thought have you put into your business insurance?The right level of insurance coverage matters if you want your doors to stay open for years to come. And for some businesses, that starts with a BOP.
What Is BOP Insurance?
A Business Owners Policy (or BOP) packages three essential types of coverage into one policy. Business Owners
Policies were developed (and so named) for the simple reason that they encompass three types of insurance coverage
that a majority of business owners need.
If you ever need a plain-language definition of an insurance term while you’re researching coverage, the NAIC
glossary can also be helpful.
What Does a Business Owner’s Policy Cover?
1. Commercial Property Insurance
When most people think about insurance claims, they’re thinking about risks to physical property. Fire, water, and
robbery are all examples of threats to your space, tools, equipment, and inventory.
Commercial Property Insurance covers any physical property that your business owns, including (but not limited to):
- Structures
- Equipment
- Inventory
- Furniture
2. General Liability Coverage
In this day and age, lawsuits are an ever-present risk. It’s enough to make any business owner feel like they have
to watch every step.
General Liability Insurance helps protect your business against lawsuits alleging that you were the cause of injury
and/or damage to a third party.
Here’s a simple example. A customer walks into your shop, catches a shoe on a slightly curled floor mat, and takes
a bad fall. Or an employee accidentally bumps into a client’s laptop during a meeting and it hits the floor. Those
are the kinds of everyday situations that can turn into expensive claims.
It’s also possible (and increasingly common) to get sued for damages even if you did nothing wrong. And even if you
win, defending yourself in court can mean hefty legal fees. General Liability Coverage can help you pay for that
legal assistance.
3. Business Interruption Coverage
Whether you’re cleaning up your restaurant after a plumbing leak or dealing with repairs after a covered loss, you
may have to pause normal operations. If you have to close up shop for a few weeks, you’re bound to have a drop in
income.
4. 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, a temporary closure doesn’t have to bankrupt you.
Advantages of a Business Owner’s Policy
BOPs package a business’s most essential needs into one convenient policy. Bundling your coverage in this way can
be an efficient way to start your commercial insurance coverage.
Bundling may also save money over time, depending on the carrier and the details of your business. In the eyes of
the insurance company, buying multiple policies can sometimes be viewed as less risky than buying just one type of
coverage. Carriers have entire departments tasked with crunching numbers and analyzing data, and that influences
how they calculate premiums.
Which Businesses Need BOP Insurance?
BOPs are designed for businesses that carry roughly the same level of risk. That means there are plenty of
businesses that fit the profile, but not every business will qualify with every carrier.
You should consider a BOP if you:
- Have physical property or equipment
- Have the possibility of being sued
- Can’t afford to lose business income during a shutdown
Put simply, many business types can benefit from a Business Owners Insurance Policy. Think of the kinds of
businesses that have a physical space, customers, and daily operations that would be painful to pause:
- A retail shop with inventory and foot traffic
- A bakery or small restaurant with equipment and daily sales
- A small office or professional space with computers, furniture, and clients coming in and out
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.
BOP Insurance Cost
BOP insurance cost depends on the specifics of your business. Two companies can both “need a BOP,” but look totally
different to an insurance carrier.
Here are some of the biggest factors that typically affect the price:
- Your industry and operations (what you do day-to-day)
- Your business location and building characteristics
- The value of your property, equipment, and inventory
- The coverage limits you choose and how much risk you keep via deductibles
- Your revenue, payroll, and number of employees (where applicable)
- Your claims history
A helpful way to think about cost is this: you’re not shopping for the cheapest policy. You’re shopping for a
policy that can actually do its job when something goes wrong. A too-thin BOP can be cheap in the moment and
expensive later.
Customizing BOP Insurance With Endorsements
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</a >
- Inland Marine Insurance
- Commercial Auto Insurance
- Employment Practices Liability</a >
- Workers’ Compensation</a >
- Disability Insurance
- Health Insurance
A quick note so this list doesn’t mislead you: some of these coverages are commonly written as separate policies
(not simply “added” to the BOP), depending on the carrier and the situation. And while health insurance can be a
business need, Harry Levine Insurance does not offer 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 your local independent insurance agent to see which options may be best for you.
Shop Smarter
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.
We know that buying insurance isn’t the most fun aspect of running your own business, but it is one of the most
essential. Get a free quote now to ensure that you are protected should disaster strike.
