Business Owners Policy

A Business Owner's Policy (BOP) is a type of package insurance designed to meet the needs of small and medium-sized businesses. It combines several essential coverages into a single policy, offering convenience, affordability, and comprehensive protection compared to purchasing individual policies for each coverage.

Base Coverages

The specific coverages included will vary significantly depending on the type of business, its size, location, industry, and specific risks. However, there are some general categories of coverage that are frequently found in many business insurance policies:

Liability Insurance

• General Liability: This comprehensive coverage forms the cornerstone, protecting against claims of bodily injury, property damage and personal injury to others arising from your business operations, products, or premises. Even if a lawsuit against your business is ultimately found to be invalid, General Liability covers your legal defense costs and includes attorney fees, court costs, and other associated expenses. The most common coverages include: Show More....
  • Bodily injury: Covers medical expenses, lost wages, and other costs associated with bodily injuries sustained by others due to your business activities, on your premises, or by your products.
  • Property damage: If your business activities (including employees, vehicles, or products) damage someone else's property, this covers repair or replacement costs.
  • Personal & Advertising Injury: Covers legal defense costs and damages awarded to others due to non-physical injuries stemming from your business activities, including libel and slander, copyright infringement and wrongful eviction.
  • Products and Completed Operations: Protects against claims alleging injuries or property damage caused by defective products your business manufactures, distributes, or sells. It is essential for businesses that manufacture, distribute, or service products.
  • Hired and Non-Owned Auto: Typically covers liability only coverage arising from rented, leased, or employee-owned vehicles used for business purposes.

Property Insurance

• Commercial Property Insurance: Covers the repair or replacement costs of your main building, rented offices and any owned structures like garages or storage sheds as well as the furniture, equipment, inventory, and other business belongings inside your building.
• Business Interruption: This can help cover lost income and operating expenses if your business is forced to close or operate at a reduced capacity due to a covered event like a fire, natural disaster, or power outage.
• Inland Marine Insurance: While some standard insurance covers property at a fixed location, Inland Marine covers property while in transit, such as goods being shipped or transported.

Common Additional Coverages:

• Commercial Auto Insurance: Covers your business vehicles for collisions, comprehensive damage, liability, and medical payments.
• Crime Insurance: Protects against financial losses stemming from fraudulent activities like employee theft, embezzlement, forgery, credit card fraud, or burglary and robbery.
• Cyber Liability: Covers costs associated with data breaches, including legal fees, notification to affected individuals, and credit monitoring. This is especially relevant for businesses that store customer information, like credit cards or other sensitive information online or on-premise.
• Workers Compensation Insurance: A mandatory insurance program in most states that protects both employees and employer by providing medical care and wage replacement benefits to employees who are injured on the job. The most common additional coverages included are: Show More....
  • Employers Liability: This coverage protects your business if an employee sues you for a work-related injury or illness, alleging that your negligence contributed to their condition. It covers medical expenses, lost wages, and legal defense costs associated with such lawsuits.

Optional Coverages to Consider:

• Contractual Liability: Covers your business if you accidentally breach a contract and cause harm to another party. Typically used by businesses that enter into or provide services through a written contract.
• Directors and Officers (D&O): Protects directors, officers and board members of a company or organization from personal liability for claims arising from their decisions or actions.
• Employment Practices Liability: Protects against lawsuits alleging discrimination, wrongful termination, or other employment-related issues.
• Professional Liability Insurance (E&O): Protects against financial losses if you or an employee makes a mistake in their work or offers incorrect advice.
• Event Insurance: A specialized, short-term policy for protecting your business or corporate events, like charitable fundraisers, fairs/festivals, shows (cars, planes, concerts, etc.), company picknicks/BBQs, and much more.
• Surety Bonds: A surety bond is a promise to be liable for the debt, default, or failure of another. It is a three-party contract by which one party (the surety) guarantees the performance or obligations of a second party (the principal) to a third party (the obligee).

Benefits of a BOP

• Convenience: Combines multiple coverages into one policy, simplifying management and administration.
• Cost-effectiveness: Often cheaper than purchasing individual policies for each coverage separately.
• Comprehensive protection: Addresses essential risks faced by small businesses.
• Flexibility: Many BOPs offer optional add-on coverages to tailor protection to specific needs.

Things to Consider

• Not one-size-fits-all: Coverage limits and exclusions may not be sufficient for all businesses.
• Carefully review exclusions: Understand what's not covered to avoid gaps in protection.
• Consult an insurance professional: Discuss your specific needs and ensure the BOP offers adequate coverage.

Remember: While BOPs offer convenience and affordability, they may not be suitable for all businesses. Carefully evaluate your specific needs and risk profile, and consult with an insurance professional to determine if a BOP is the right choice for you and choose the most suitable coverage options and limits.