With over 32.5 million businesses currently operating within the United States, according to statistics from Albany Business Review, the competition is steep. For added protection, small business owners should consider investing in a Business Owners Policy (BOP) insurance.
Every business owner needs to protect their employees, assets, and data with legal and financial protection. Business owners' policy combines several different insurance products into a convenient package geared towards small and medium-sized businesses.
It is a type of general liability policy with property coverage and business interruption support bundled together at a cheaper rate. However, there are different types of business owners' policies available on the market, in addition to a list of eligibility criteria.
Different providers have their own specific requirements depending on a business's location, size of the location, business income, and type of business. Typically, low-risk industries like retail stores, apartment buildings, smaller restaurants, and single offices can qualify for this policy.
General liability insurance can come in handy in the event of a potential lawsuit. However, if a customer slips and falls at a store, having a BOP can help cover medical and legal fees.
BOP insurance can also protect workers who may accidentally cause property damage, mess up company equipment, or harm customers. An insurance company can help cover the cost of replacing assets that are stolen or damaged, such as inventory, digital property, and furniture.
If private customer data is leaked, BOP policies can also help pay for public relations costs and notify customers of the data breach. Having proof of insurance documents can also be useful for small business owners who need to sign a lease.
Business Owners' Policy combines commercial property and business income with your general liability coverage. While general liability insurance helps protect you from claims related to bodily injury or property damage, commercial property insurance covers claims related to your business’ physical location and any leased or owned equipment.
As opposed to that, professional liability insurance can provide an extra layer of protection if someone sues you for errors in your professional services, including negligence, copyright infringement, and/or personal injury.
Choosing the best business owner's policy and/or professional liability insurance plan can help small business owners address common liability risks related to their industry.
Those who would find a business owner's policy most useful include:
Those who would find professional liability insurance most useful include:
| Pros of BOP | Pros of PLI |
| Covers compensation for property damage and theftPays for the cost of medical expenses and bodily injuryOften includes provisions for business interruptionCan be fully customized to fit any industryOffers cost savings for combining multiple coverage typesOther types of business insurance can be added to the policy | Covers employee negligenceAddresses copyright law issues and oversightsCovers claims for libel and slanderPays for legal defense costs regardless of faultMay include protection for current and previous work completedCan provide coverage for temporary staff and independent contractors |
There are many factors that can impact the cost of a business owners' policy. However, the average BOP insurance rates for 2022 range between $500-$2,000 per year on an annual basis. This can depend on the coverage limits you choose, although most businesses tend to choose a $1 million occurrence limit and a $2 million aggregate limit.
In contrast, if you do choose to purchase general liability and property insurance policies separately instead of a BOP insurance policy, you will probably end up paying around 10% more than if you decided to combine both plans in a BOP. This is why many small businesses tend to choose a business owner's policy instead of potentially spending more.
In addition, higher risk industries will end up paying a higher premium compared to lower risk industries. The type and value you're insuring will also significantly impact the cost of the commercial property insurance part of your BOP policy, as well as the geographic location of your business and its age. Unfortunately, newer businesses tend to pay higher BOP costs.
This type of coverage protects businesses on their commercial buildings, warehouses, office spaces, and any property owned by the business. It can help cover the cost of debris removal, pollution income, and loss of income for a business owner.
However, this area tends to exclude damage from natural disasters like earthquakes that can cause injury or damage to a business owner's real estate property. Extending this coverage might be an option to strengthen BOP insurance.
For every business owner, paying for medical bills can impact their day-to-day operations. The good news is that BOP insurance coverage includes third-party liability coverages such as bodily injury and personal and advertising injury liability.
It can cover medical expenses incurred by those injured as a result of business activity, including both workers and customers. However, some exclusions of BOP include host liquor liability and damage to rented premises.
Another area covered by a BOP policy, in addition to property and liability insurance, is business interruption insurance.
If business operations and business income are impacted by a fire, smoke damage, or a similar catastrophe, an insurance company can protect small businesses by covering the loss of income. They might also shoulder the costs of renting out a temporary business location.
Crime insurance is designed to protect companies from business-related crime. This provides coverage for cash, merchandise, assets, and property loss related to a crime. While it's not usually part of a BOP policy, it is helpful for businesses that are prone to being victims of fraud, copyright infringement, forgery, theft, robbery, embezzlement, and more.
Business property like cars, trucks, and vans can also be protected by an insurance company. A BOP doesn't provide standard coverage plans for commercial auto insurance, but it can be purchased separately. During vehicular accidents, having company vehicle insurance can be a useful complement to physical injury or property insurance.
Many commercial property business insurance policies fail to include flood insurance as part of their programs. The National Flood Insurance Program provides a range of options for business owners looking to protect their property.
It is also mandatory if a business owns property located in a flood-prone area and is mortgaged through a lender that is insured or regulated by the federal government.
Most small and medium-sized businesses that own assets including equipment and inventory can benefit from business owners insurance. They are usually available for those that generate under $5 million every year in terms of revenue and employ fewer than 100 workers. Brick and mortar businesses would also benefit from a BOP.
Some common types of businesses and industries that need a business owners policy include:
A small to medium-sized business with a physical store should strongly consider getting a BOP in order to address the threat of getting sued. Any business that has physical or digital assets is vulnerable to these being damaged or hacked into, making business liability protection extremely vital.
There is a list of various requirements that a business should think about when investing in a BOP. Often, those in low-risk industries are more likely to qualify for this umbrella policy, if they're looking for a combination of general liability insurance and property insurance coverage at a discount.
Those with less than 100 workers, operate within a small office or workplace, earn less than $1 million in annual revenue, and require less than 12 months of business interruption insurance to meet most qualifications.Â
For document particulars, you can set an appointment with an insurance agent to review their overall Business Owners' Policy (BOP) insurance program and get a good quote for your needs.
The main difference between a Commercial General Liability policy and a Business Owners Policy is that the CGL only covers liability losses while a BOP covers both liability and property losses.
A CGL covers bodily injury, property damage, personal and advertising injury, medical payments, and the cost of legal defense costs. A BOP policy covers these liability coverages listed in addition to the building and personal property belonging to the business.
For those who own several businesses, a business owner's policy can be an invaluable asset. Business liability insurance can cover expensive legal costs, medical costs, and other covered losses that can cut into your profits.
Ready to level up your business protection? Our blog has the inside scoop on Business Income Coverage, a must-know for every business owner exploring Business Owners' Policies. Get ahead of the game and shore up your financial security. Check it out!
If you’re still unsure about whether your business qualifies for a BOP, read on to learn more about other types of business insurance on Assured Standard today!
