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 or BOP insurance for short. Every business owner needs to protect its 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 insurance policy with property insurance and business interruption insurance bundled together at a cheaper rate.
However, there are different types of business owners insurance available on the market, in addition to a list of eligibility criteria. Insurance providers have different 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.
A BOP combines both property insurance and liability coverage in order to protect smaller businesses. It is available for a business owner who has less than 100 workers and is more affordable than buying these policies separately from an insurance company.
General liability insurance can come in handy in the event of a potential lawsuit. 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 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 insurance can also help pay for public relations costs and notifying customers of the data breach. Having proof of insurance documents can also be useful for business owners who need to sign a lease.
Most insurance providers create package policies for business owners that combine business interruption coverage to protect their business as well as general liability that covers things like bodily injury or property damage.
Property damage protects businesses by providing coverage for commercial buildings and any property owned by the business. It can help cover the cost of debris removal, pollution income, and the loss of income for a business owner related to a loss.
However, this area tends to exclude damage from natural disasters like earthquakes that can cause injury or property damage to a business owner's premises. 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 costs incurred by those injured as a result of business activity, including both employees 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 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.
However, a BOP does not usually take into account aspects like professional liability, workers compensation, disability insurance, or health insurance. Some business types should consider investing in added coverage outside of BOP insurance that an insurance company might provide, such as auto insurance and crime insurance.
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, 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 auto insurance, but it can be purchased separately. During vehicular accidents, having company vehicle insurance can be a useful complement to bodily injury or property insurance.
Many commercial property business insurance policies fail to include flood insurance as part of their packages. 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.
Business insurance policies typically only take into account physical liability and property damage. This means that small businesses can still be vulnerable to other types of situations. Coverages that they should consider purchasing in addition to BOP include worker's compensation, professional liability coverage, and more.
For those who are real estate agents, lawyers, doctors, and accountants, this type of coverage can help protect their business. Professional services are prone to lawsuits from customers who receive bad advice or malpractice due to incorrectly performed services. General forms of insurance don't cover this, but it is crucial to help protect your business from expensive court battles.
Also known as EPL insurance or EPLI, this form of insurance protects employers from claims made by employees related to workplace discrimination, wrongful termination, harassment, or failure to promote.
Smaller business owners are especially vulnerable to employment claims because they don't usually have a legal department to deal with the complex processes of hiring and terminating employees.
Worker's compensation takes care of the financial needs of workers who suffer from injury or disability at their place of work. It is mandatory in almost every state, so a business owner should consider looking into the plans that they offer. This policy typically covers medical fees and waives the right of the employee to sue their employer.
One convenient form of insurance coverage that a small business should also consider is cyber insurance. With many businesses storing sensitive data online and conducting virtual transactions, having this policy in place can help recover lost data, repair reputation damage, and pay for any legal settlements and fees as a result of data breaches.
Data breach coverage only covers some financial aspects of a cyber attack and is more suitable for smaller businesses. However, cyber risk coverage is more extensive than data breach coverage, as it also offers coverage for lawsuits linked to customer or employee privacy and security and any fines from state and federal agencies.
Although it may be the worst-case scenario for every business owner, the threat of terrorism should be considered beyond a BOP policy. This extends coverage to any damaged and destroyed property as well as losses in the event of a terrorist attack and other acts of war. Worker's compensation policies also include this form of protection for employees.
Business owners insurance (BOP) covers employees and businesses, parties included in the contract, and in some instances, suppliers. Small to medium-sized businesses should consider investing in a BOP because it combines general liability and commercial property insurance coverages.
The costs of covering customer injuries, business property damage, accidents, and lawsuits can all harm a small business and prevent it from finding success in the long run.
A small to medium-sized business with a physical store should strongly consider getting a BOP in order to address the risk of getting sued. Any business that has physical or digital assets is vulnerable to these being damaged or hacked into, making 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 package 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 meet most qualifications.
In order to find the most reputable company with the most suitable BOP plan, it's worth doing research into each insurance policy to find out which one offers the widest coverage and at the best price. Depending on your zip code, the BOP policy might vary from place to place, so it's best to look at the legal requirements within your own state.
Considering customer reviews and the reputation of each insurance company can also help business owners decide which BOP best fits their needs in terms of property and liability coverage.
While BOP combines several coverages at a more affordable price, things like cyber threats, workers compensation, flood insurance, and crime insurance aren't usually included in the coverage of a BOP policy, so looking into additional insurance plans can help protect your business and provide added peace of mind for every business owner.
For more information on what BOP policy is the best for your company, take the first step to gain expert insights on tailor-made coverage options from a range of insurance companies and contact us at Assured Standard today!