Business ownership is one of the most rewarding, profitable, and biggest activities out there. However, many entrepreneurs struggle with trying to think through everything they need or want to accomplish as they grow their business. For instance, insurance is one thing that is often overlooked by many startups when planning for growth.
In this guide, we’ll discuss everything business owners need to know to understand what a Business Owner’s Policy (BOP) is and how it can help them protect their assets and companies from certain financial losses. Whether you’re a startup or an established business, a BOP can be a great way to get comprehensive coverage for your company. Keep reading.
What’s A Business Owner’s Policy?
A BOP is an insurance package that protects a company’s assets and the business itself. It provides coverage for a company against all types of risks, including the unlikely and the inevitable. BOPs are used by most companies and can be likened to a comprehensive policy option, providing broad protection for your business.
Why Do Companies Need A BOP?
A BOP is insurance coverage that helps protect businesses from significant financial losses. A BOP typically includes property, liability, and sometimes product and business interruption insurance. Many insurers offer BOPs, but coverage and rates can vary greatly.
There are many reasons why a company might need a BOP; these include:
Protects The Business From Damage Or Destruction: This can include the building itself, equipment, and inventory inside. For example, if a fire broke out in the office, a BOP would help cover the cost of repairs or replacement.
Protects Against Liability Claims: If someone is injured on the property or the business’s products cause injuries or damage, BOPs help you prepare against any liability claim that may arise.
Keeps The Business Running In Case Of Disasters: BOPs provide coverage for any lost income and extra expenses incurred after an emergency. This way, the business can get back on its feet as soon as possible.
What Type Of Companies Should Have A BOP?
Although various businesses benefit from a business owner’s policy, BOPs are typically recommended for small businesses because they provide comprehensive coverage in one package. Bigger businesses can benefit by customizing their coverage with separate policies for each type of insurance they need.
It’s important to discuss with insurance services what your needs are to get the best coverage for your specific needs and goals.
BOP Coverage
BOPs have two types of coverage: Liability and Property.
Liability BOP
The coverage available in a liability BOP is the same as in a general liability policy. It includes protection against property damage, customer injuries within the business property, or caused by a product. It’s important to note that BOPs don’t cover company employees; you’ll need to get a worker’s compensation policy to ensure they’re also protected.
Property BOP
This policy provides coverage for commercial buildings and any property owned and used for the business. You should talk to professional insurance services to discuss the policy’s exclusions. Also, ask how you could add any endorsements to ensure better coverage and protection against anything that the policy might not include.
Insurance BOP Bundles
Some insurers offer bundled policies that give you access to multiple insurance carriers, allowing you to choose from a wide range of options. Others offer bundled policies that are limited only to particular carriers. These bundles can include:
General Liability Insurance: This type of insurance protects your business from third-party claims of bodily injury, property damage, and personal and advertising injury.
Product Liability Insurance: protects your business from claims of bodily injury or property damage caused by your products or services.
Commercial Property Insurance: protects your business premises and contents from physical damage or loss due to fire, theft, vandalism, or other covered perils.
Business Income Insurance: protects your business from lost income if your business is forced to close due to a covered event.
Although the options mentioned above are the most popular and provide the most coverage, there are some other options that you could benefit from including in your bundle, such as:
- Commercial automobile insurance
- Professional liability insurance
- Workers’ compensation insurance
Advantages of Having A BOP
As economic conditions fluctuate, it is essential for all business owners to protect themselves from risks. Businesses encounter certain risks, but some are more vulnerable than others. A Business Owners Policy, or BOP, is designed specifically for small business owners. It protects your business against many of the common risks it faces.
This comprehensive coverage can help protect your business from a wide range of risks, including fire, theft, lawsuits, and natural disasters. The benefits of having a BOP are:
- Affordable protection – A BOP can save you money on your overall insurance costs by bundling multiple policy types into one policy.
- Reduced hassle – Having a single policy for your business can make it easier to manage your insurance coverage and make claims.
- Confidence – Knowing that your business is appropriately insured can give you relief if something goes wrong.
- Focus on what’s important – By having a BOP, you can start worrying less about the consequences of an unexpected incident and more about what’s really important – managing your business.
BOP Costs
The premiums for a BOP generally will be higher than those for an individual policy because you have limited protection, and you are backing your business with your insurer’s full faith and credit. As of 2022, business owners’ insurance costs on average $1,217 per year.
BOP Vs. General Liability
As mentioned before, a BOP usually includes property damage, liability, and business interruption coverage. On the other hand, general liability insurance covers third-party claims of bodily injury, property damage, and advertising injury.
- Bodily injury: General liability insurance will cover your customers’ medical bills if they get injured on your property. For instance, if a customer slips and falls on a wet floor of your locality.
- Property damage: If, for example, a tree on your business property falls and damages your neighbor’s car, general liability insurance will cover the repair costs.
- Advertising injury: This refers to hurting someone else’s reputation through your advertising, including if you make a false claim about a competitor and they sue you.
Whether you require a BOP or general liability insurance will depend on the scope of your business. If you have little equipment, general liability might be sufficient. However, a BOP will give you better protection if your operation requires more assets.
Commercial Package Policy vs. BOP
A Commercial Package Policy (CPP) combines various types of coverage into one package. It can include property insurance, liability insurance, and business interruption insurance. You can tailor a CPP to a business’s specific needs, making it an attractive option for many business owners.
While a BOP is best for small businesses with limited risk exposure, a CPP is best for businesses with a high risk-exposure level. This type of policy can also simplify multiple policies since everything is in one place. For businesses that require more comprehensive protection, a CPP is a convenient option to consider. Otherwise, a BOP will be more than enough to cover your business.
How Can I Get A BOP For My Business?
If you are interested in getting a BOP for your business, contacting an insurance agent is the best way to get started. They can help you determine if a BOP is right for your business and find the best policy to meet your needs. The agent will ask you about the type of business you have, the location of your business, and the value of your property and equipment. Based on this information, they will be able to give you a quote for a BOP policy.
An agent can also answer any questions you have about coverage and help you compare different policies. Contacting an agent is the best way to start the process and ensure that you have the coverage you need.
How Do I Make A Claim On My BOP?
If you need to make a claim on your BOP, your insurance agent will help you start the claims process and put you in touch with the right people. Your agent will ask you for a description of the incident, how much damage was done, and basic details like your name, company name, and policy number.
The agent will then work with the insurer to determine if the policy covers your claim, send someone to assess the damage, and conclude how much the insurer will pay out.
Nesso Insurance – Helping You Protect Your Business
Nesso Insurance is a committed insurance agency that goes above and beyond to deliver only positive experiences. We understand that selecting an insurance policy might feel overwhelming, but you can always rely on the assistance of our knowledgeable partners. Let us relieve the stress of choosing a policy on your own so you can concentrate on what’s really important: running your business.
At the Nesso Group, our mission is to offer integrated solutions to reduce stress and improve success. We offer guidance to people and businesses in several fields, including insurance, taxes, accounting, Medicare, and more. The Nesso Group breaks the status quo: we care deeply about the people we serve and work to serve them well. Let’s work together with your best interest in mind.
