Business Owners Insurance– What’s really covered?
Insurance for business owners goes by many names in the small business insurance market. Often it’s called a BOP or business owners policy – pretty simple, right!? But this type of package policy can go by many other names as well, BOP is sort of the generic term the insurance industry has applied to a package sold to small and medium-sized business owners.
What’s really covered?
Each insurance company’s BOP policy is going to be slightly different from each other, but the most common feature of the BOP is that it combines property insurance and liability protection into one policy and then includes a ton of what I call fringe coverages like some crime coverage into the policy.
Property Insurance on a BOP can include your building coverage, coverage for your business personal property or contents, and very important business interruption coverage which is also called business income coverage. The BOP handles business income coverage in a very simple format. Rather than having to schedule a limit of protection here, the BOP will commonly include business income or business interruption coverage for your actual loss sustained for up to 12 months.
What this means is that if you suffer a covered claim on your policy that forces you to close all or part of your business to recover from that claim, your policy will pay for the lost profits and continuing business expenses for up to 12 months while you rebuild your premises. There’s a lot of details I’m omitting here, like that your insured premises must be damaged for the claim to be covered, but that explains it pretty broadly.
The advantage of the BOP covering it this way is that business owners often have a hard time figuring out what an appropriate limit of coverage should be on other property policies, so this simplifies it pretty well.
On the liability insurance side of the policy, you usually can choose limits of general liability coverage for $1,000,000 per occurrence and $2,000,000 aggregate as the base coverage, or opt for higher limits like $2,000,000/$4,000,000.
Another liability option that you can include is for non-owned and hired auto, which I explain here.
In addition, many BOP policies also can include umbrella liability coverage in increments of $1,000,000 up to $5 million or $10 million depending on the insurer.
Then you get into the fringe or additional coverages which I’ll explain in a minute.
First, I want to say that a BOP policy does not cover professional liability, auto insurance, or worker’s compensation. Those are separate policies that need to be purchased in addition to your BOP policy.
Now, some BOP policies can include some Cyber insurance, but I don’t recommend going this route unless you’re a very small business because these cyber policies are typically not broad enough to really cover you and your company from all the risks that cyber threats present.
So, what about those extra coverages?
Many BOPs will include limits for crime coverages like employee dishonesty, money and securities, and forgery and alteration, but make sure these are sufficient for your business needs. These can often be increased by endorsement or you can purchase separate crime insurance if needed.
Equipment breakdown, outdoor property, sign coverage, loss of refrigeration, off-premises power failure, computer fraud, debris removal, backup of sewers and drains, property in transit, valuable papers and records, and many other coverage parts are commonly covered by a BOP to just name a few.
Now, you may be asking, how much does a BOP policy cost?
That’s a good question, but it’s not an easy one to answer because a BOP policy like all other forms of business insurance are underwritten and priced on a variety of factors, including the industry you’re in, your geographic location, the size of your business either in sales or number of employees, the limit of property insurance you cover, your liability limits, your loss history, and many other factors.
So, how do you find out how much does a BOP policy cost your specific company?
That’s easy. Find an insurance agent or broker who is an expert in business insurance and ask them for a quote. I’d hope of course that you’d consider giving us here at The Coyle Group a call and speaking to us about your business insurance needs, but if you like to work locally, then find a local broker who you can trust and build a relationship with.
Thanks for watching this video, my name is Gordon Coyle and if you’re looking for help on business insurance costs or have a business insurance question, give me a call, let’s chat. No pressure, no sales gimmicks just some conversation to see if I can help you and if we might be a good fit for your business insurance needs.
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