What Is a Business Owner’s Policy and What Should One Cost?

Aug 9, 2020 | Business Insurance

Owning a business is a dream for many people and it’s one that can be incredibly rewarding when realized. However, owning a business means opening yourself up to liabilities that could ultimately destroy your dream if you aren’t prepared.

Small businesses account for over ninety percent of total businesses in the US. However, studies show that somewhere near seventy-five percent of those businesses are underinsured, with forty percent having no owner’s policy at all.

If you’re among the businesses that are underinsured, you could be leaving your livelihood and your dream vulnerable to a host of issues that could hang a permanent “closed” sign on your door. Keep reading to learn how to protect your business with a business owner’s policy.

What’s the Worst That Could Happen?

Many business owners tend not to think about issues until they come up, but that could be too late. Let’s look at some of the claims that could be brought up in a business owner’s policy every year.

Customer Complaints or Disputes

Claims that are filed annually regarding customer care include client dissatisfaction with work and products, mistakes made while working, work that wasn’t delivered, or perceived negligence on the job.

Employee Injuries

A simple miscalculation can lead to far-reaching injuries. The bills associated with employee injuries include hospital and medical bills, rehabilitation costs, and missed wages while the employee recuperates. 

Burglary and Theft

Each year, numerous businesses are broken into and vandalized or have property stolen. This includes claims from both unknown parties and employees to the company.

Fires and Storm Damages

These claims involve the business or property of that business being damaged from fires or a natural event that was included in the policy.

Customer Injuries

If a client is injured on your property or by one of your products and services, you could be facing a personal injury suit.

Products That Caused Injuries or Damages

If your business sells products, you could potentially face a lawsuit if one of those products is defective or causes injury, even if it’s being used incorrectly!

With all these possibilities for claims, there’s a high likelihood your business owner’s insurance will come in handy. If you aren’t carrying business insurance that would protect you in the event something happens, you’re flipping a 50/50 coin each year and hoping to come out on top.

What Is a Business Owner’s Policy?

A business owner’s policy, or BOP, is a single policy that combines individual policies into one umbrella agreement. It is meant to protect and cover a business from all major property and liability risks.

The beauty of a BOP is that you get all the individual coverages you need in one tidy policy at a discounted cost compared to purchasing the policies separately.

Most business owner’s policies include:

Property Insurance

This will usually be available as “named-peril” coverage, meaning it includes coverage only for events specifically listed in the policy. These can include fire, wind, explosion, vandalism, smoke and the like. Some policies are offered as “open-peril” policies, meaning they cover any event.

The property covered in this policy usually includes buildings, business-owned items, and third party items not owned by the business but kept in the business’s care for business reasons.

Business Interruption Insurance

A business interruption policy ensures that any loss of income resulting from an event will be replaced. It also covers expenses related to finding a temporary location to operate from while your location is repaired.

While many owners consider the initial expense of having to replace or rebuild their business, they don’t pause to consider the detriment of income lost while those repairs are taking place. Business interruption policies make sure your business isn’t stopped in the process.

Liability Protection Insurance

This policy covers any liabilities you might be responsible for. This includes accidents and injuries that happen during normal business, faulty products or installations that cause damage or injury, and legal responsibilities that can come up due to negligence.

Other Types of Insurance

Your business insurance should be built to meet your needs, and this sometimes includes special considerations. Additional policies like crime insurance, flood insurance, and vehicle coverage are often added onto BOPs.

You might also need insurance to cover unique events like spoilage, computer and electronic insurance, mechanical breakdowns, or forgery insurance.

An experienced insurance agent can help you navigate through the different aspects of your business and decide what needs to be covered.

How Much Does a BOP Cost?

Because business owner’s policies can vary in coverages to meet the needs of the individual businesses they work with, there is no definitive annual premium.

Most BOPs cost an average of $1,200 per year, but the range varies from $350 up to $3,000. Remember, these policies are priced as a package deal and are cheaper than trying to purchase individual policies.

Is My Business Eligible for a BOP?

There are certain criteria you must meet to be eligible for a BOP. These include requirements regarding the size of the business, the location, annual revenue, and the type of business you run.

For instance, one requirement is generally that all business is done on business premises, not off-site.

Most business classes, including retail stores, smaller restaurants, offices and small apartment buildings qualify for BOPs.

Finding the Right Business Owner’s Policy 

Trying to think ahead and explore hundreds of possible hypothetical scenarios that could spell disaster for your business isn’t fun, but if you’re one of the businesses reporting a claim, it’s worth it.

Having an experienced and licensed insurance agent who can help you navigate those hypotheticals and make sure you’re covered is the best way to protect your dream and investment from liability.

Call the professionals at Advantage Insurance Solutions today and let us help you make sure you have the right business owner’s policy in place!