Business Owners Policy is a smart choice for small-to-medium businesses. BOP is an insurance policy that consists of Commercial Property Insurance, General Liability Insurance, and Business Interruption Coverage. Having these coverages under one policy can save you more money than buying them separately. Hence, buying a BOP is a convenient move to secure your assets. But what really goes to the BOP that works for businesses? To better understand if these types of coverages work, read on.
- We sell BOP as a premium. It is a package that bundles the basic insurance coverage that a business should have.
- BOP guards a business against physical property damage, business interruption, liability, and perils.
- Not every business can qualify to have BOP. It is usually based on the business’ locations, type of business, revenue, and the size of the business itself.
- Aside from the standard coverage of a BOP, a business can add more in the insurance coverage such as spoilage of merchandise, crime, fidelity, forgery, and more.
Who needs a BOP?
Generally, a BOP can cost from $53 to $99 per month. And small-to-medium businesses are the best candidates to have a BOP. Here are the characteristics of a business that needs to have BOP to its insurance.
- A business that has a location or physical building. You can own, rent or have the building home-based. It can be a store, restaurant, or office.
- If a business has less than $5 million of sales and has less than 100 employees.
- A business that has properties that you can steal like cash, computers, goods or products, pieces of furniture, and inventory.
- The type of business that is at risk of having lawsuits.
Not every company can have a BOP and here are the recommended businesses to have one: restaurants, manufacturers, wholesalers, retailers, organizations, and technology consultants.
What is General Liability Insurance?
General Liability Insurance guards your business against several claims such as reputational harm, advertising harm, property damage, bodily injury, and copyright infringement.
- Reputational Harm- This is if you committed negative or false accusations about other businesses through social media, television, interviews, and in prints.
- Copyright Infringement – Copyright infringement claims can happen if other companies accuse you of using their copyrighted work or materials without their consent.
- Advertising Injury- This coverage is a commercial general liability component. It guards the insured against claims such as invasion of privacy, stolen ideas, slander, and libel.
- Bodily Injury- Bodily injury can happen in any business. It is one of the most common incidents business’ encounters. If this happens, your general liability policy will cover all the qualified incidents that caused bodily injury.
- Property Damage- This is also one of the most common types of claims. It can protect you when a client goes to your business and their property has damages. For example, You have a pet shop. Due to your employee’s negligence, an aggressive puppy ran out of the kennel and bit the purse of a passing client. Property damage can also happen while you or your employee is visiting a client’s place and causing damage to their property.
Moreover, having General Liability can make your market bigger. Because some clients may demand that you should carry general liability before they commit and have business with you.
What is Commercial Property Insurance?
Commercial property insurance protects your business’ physical property. Several incidents and perils are part of the coverage such as natural disasters, vandalism, explosions, theft, and burst pipes. However, earthquakes and floods are usually not part. You can also buy commercial property insurance and choose between Replacement Cost or Actual Cost Value. This can affect the amount of your insurance and how you can receive payment in case of a claim.
How much is Commercial Property Insurance?
Generally, the amount of commercial property insurance is around $63 a month or $756 annually. However, just like any type of insurance, the amount of your commercial insurance depends on many factors like:
The type of business you have
The industry of your business can affect the amount of your insurance. For example, you have a restaurant. Having a restaurant is more prone to accidents. Your employees are cooking all day. The risk of having fire and injuries is higher if we compare it to a flower shop business.
The location of your business
Just like Homeowners Insurance, the location of your business can highly affect the amount of your commercial property insurance. Properties that are in flood-prone areas or high-risk bushfire areas have a higher amount of insurance. You might also need to add extra coverage if this is the case. So, it is always best to talk to your insurance agent about this matter to make sure that you are using your coverage well.
Tip: If your business is near a fire station, it can lower your commercial property insurance due to the security that the fire station can give. Hence always ask your insurer for anyways that can lower your rate more.
Buildings with safety features and good construction
Again, just like in home insurance. The type, age, and safety features of the building where your business is located can affect the amount of your insurance. If the property is new and has safety features like a fireproof building, sprinkler system, a fire alarm, and a theft security system, then the insurance can be cheaper.
If you only rented a building with tenants other than you.
Many businesses rented space inside a building because it is cheaper. However, even if you have a low-risk type of business, there is still a chance that the rate of your commercial property insurance will get high. This can happen if the other tenants in the building have high-risk types of businesses like restaurants and laundry shops.
What Does Commercial Property Insurance Cover And What Does Not Cover?
Commercial property insurance protects the physical aspects of your business’ building. It also covers everything that is inside that building like computers, important documents, pieces of equipment, furniture, exterior designs, inventory, and even landscaping.
However, commercial property insurance coverage has limitations just like any other type of insurance. Not all perils and incidents are part of the insurance policy. Here are the examples of the things that are not part of the coverage:
- Flood – Damages caused by floods due to bad weather conditions are not covered by commercial property insurance. Though generally, flood is not included in standard insurance. But if you are living in a flood-prone area you should ask your insurance agent about your options in adding a separate policy for a flood. Flood damage can severely impact your business. And on some occasions can be the reason for a total loss that can lead your business to close temporarily.
- Damages from outside the building – Any damages that you or your employee caused are not part of the coverage. For example, your employee went outside to deliver something to a client’s house. Then your employee accidentally broke the client’s expensive vase. Your commercial property insurance cannot cover that.
- Car accidents– A car accident is a common type of accident that can happen if you have a service car that is frequently used by you or your employees. So if pick-up and delivery are included in your business routine, it is best to have your car insured.
Business Interruption Insurance
Business Interruption Insurance helps your business in case that you need to temporarily shut down your business due to certain perils like windstorms or fire. This can cover the loss of income while your business is not operating. Also, it can reimburse the expenses for the rental fees while you temporarily rent another space for your business. Though business interruption insurance is included in BOP, you can have this coverage as standalone insurance.
Business Interruption Insurance Covers
Usually, business interruption insurance covers the lost revenue due to qualified perils. But you can also add different types of coverage such as :
- Loss of profits or income – While your business is temporarily closed and not generating profits, your business interruption insurance can cover the money that your business should be getting.
- Payroll Coverage – While your business is not operating, so do your employees. To keep your employees while your company is on shutdown, your insurance will cover the payroll or wages of your employees throughout the time that your building is being fixed.
- Overall operating expenses – Operating expenses are the bills that are used to keep the business running. This includes the mortgage or rent, and the utilities.
- Loans and taxes– If you have debt or paying a loan, your business interruption insurance can help you pay them while your business cannot operate, and the same goes for your taxes.
Business Interruption Policies Do Not Cover
Truly that insurance can’t cover everything under one policy. You need to add different types of commercial insurance to be fully covered. You might add Worker’s Compensation Insurance or Commercial Auto Insurance in your Business Insurance Policy.
Here is the list of the things a Business Interruption Insurance does not cover:
- Injuries of your employees
- Physical damage to the building
- Damage to the company vehicle
What BOP does not cover?
Although Business Owners Policy or Business Owners Insurance is convenient and a smart choice for small businesses, still, it has some exclusions that you need to consider. Here are the things that a BOP does not cover:
- Professional Liability Insurance– Professional Liability Insurance also known as Errors and Omissions Insurance covers the claims regarding professional mistakes made during business hours. For example, you or anyone on your employee gave wrong advice or recommendations that harmed the client.
- Workers Compensation Insurance – Most states require an employer to carry workers’ compensation insurance to protect their employees against inevitable incidents during work operations. It doesn’t matter if you only have one or two employees, still, you need to have this coverage for your employees’ safety. It can also cover their medical expenses and lost income in case they got injured while on the job and were not able to work while recovering.
- Commercial Auto Insurance – This covers the car used solely for business. It can be a delivery car or service car. It can also cover a car that you just rent or a personal car that you use for your business.
In a nutshell, Business Owners Insurance is a good choice for a qualified business that needs the basic coverages rolled into one policy. You can be covered with three types of insurance at an affordable price. And you can just add more coverage if you feel that you need more. If you are wondering, will it work? The answer is yes! Because each insurance should be tailored-fit to the client’s needs. And a policy will surely work and be worth your money if you truly need it.
Let us help you find the right insurance for your business needs today! Call us now toll-free at (855) 973-1202 or (855) 712-6584. Advantage Insurance Solutions have commercial insurance experts who can guide you. Let our team be your business’s advantage!