Insuring your business requires commitment, and part of that commitment means recognizing the fact that your business is entirely unique and requires very specific coverage in order to be fully protected. Though you must, of course, have a strong risk management strategy in place, you still have to have your insurance policies ready to go in case something ever goes wrong that you did not expect.
Still, the business insurance marketplace is extremely complex, comprising of multiple lines of coverage that are each designed to protect you against numerous hazards that could arise at any time during your operations. However, to small businesses, coordinating numerous plans in the most cohesive and cost-effective fashion might feel very difficult.
To help ease this burden, many small businesses qualify for a business owners policy (BOP). This is an expansive package of foundational insurance benefits that are contained within one place. Still, BOPs must be supported by other benefits that will work alongside it to comprehensively protect the business.
What are BOPs?
There is not a single policy known as business insurance. This is a general term used to describe the multitude of property and liability policies that help insure businesses across all industries and specialties. Generally, most businesses need numerous types of coverage in order to create the strongest risk management program for themselves.
However, small businesses often don’t have unlimited money or time to juggle multiple benefits. BOPs are designed to help eliminate this stressor. They contain several foundational, critical business insurance options in one place, which frees you from the obligation to carry certain coverage piecemeal. Benefits will be housed in one place, and businesses will only pay a single premium.
Coverage in Most BOPS
Generally, BOPs contain three to four benefits as standard coverage:
- Property insurance: You might own the building in which you operate. If something happens to it, you need to pay for repairs or replacements. This coverage might help you do so.
- Possessions insurance: Contents and physical assets within the business might sustain damage during mishaps. This coverage can help replace those items. In many BOPs, possessions insurance is part of the property insurance.
- Commercial general liability (CGL) insurance: You have a duty to your clients. If something happens to them when doing business with you, then you might have to pay for their losses. Coverage will often pay for bodily injuries or property damage you cause to third parties through your negligence (even unintentional negligence). It can also assist you in case the affected party takes legal action against you.
- Business interruption coverage: If a serious incident occurs in the business, then you might have to close temporarily. Yet, operating costs like salaries and utility bills might still beckon. This coverage helps you still pay those costs until you can reopen and start making money again. Coverage might also pay for temporary relocating the operation.
Your agent is committed to helping you design the coverage limits, deductibles and policy endorsements that you can use to customize and enhance the BOP itself. At the end of the day, you need this coverage to be as strong as conceivably possible before you can consider expanding upon your benefits. However, you should always remember that your BOP is just a starting point for your benefits.
It Doesn’t Cover Everything
Think of business insurance like a construction project. If you think of a BOP as the foundation of your business insurance coverage, then you must remember that homes are more than just foundations. You will therefore need to build on top of the BOP in order to create a comprehensive insurance portfolio.
Supplementary policies you might need include:
- Equipment breakdown insurance: Coverage will often pay for breakdowns to important machinery. The breakdown might hamper operations, after all. Coverage might also pay for sudden HVAC system failures, phone outages and similar occurrences that impact operations.
- Cyber liability coverage: Computer systems might face risks of data theft or loss. If this happens, clients could suffer financial losses. Other threats, like identity theft, might also beckon. Coverage can help you pay for their data recovery and even lawsuits related to these incidents.
- Data loss coverage: A policy might pay to help you cover repairs to data systems after losses.
- Errors & omissions insurance: Your professional mistakes might cause financial losses to clients. This coverage might help you repay them for such losses.
- Inland marine coverage: If you need to ship or move items, this coverage will protect them during transport.
- Umbrella insurance: This is extra liability insurance that kicks in if your standard coverage surpasses its existing limits. Coverage might also pay for risks not covered by your CGL coverage.
In some cases, you can add this coverage to your BOP as endorsements. In others, you will have to buy separate policies. Your employee benefits, workers’ compensation and commercial auto insurance will be separate in all cases.
Though BOPs are not for everyone, they are great for small businesses through both their benefits offered and pricing structures. Still, the basic tenets of BOPs remain essential for all businesses, so use this policy as the guidepost to help you establish your own benefits, whatever those might be.
Also Read: Why Small Business Owners Need Liability Insurance
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