Should You Get Business Owners Policy Insurance?

As small business owners know, there are many types of business insurance. In fact, it can be confusing. The Business Owner’s Policy BOP is a policy that has business insurance benefits because it combines coverages under one umbrella.

How much does business insurance cost? What’s included in a BOP policy? Do you need coverages that aren’t part of the standard BOP policy?

What is Business Owners Policy Insurance?

Small businesses like business owner’s policy insurance for three main reasons:

Broad insurance coverage needs are combined in one policy
The business owner’s policy – because of that combination – saves money.
The BOP insurance combines general liability insurance and property insurance, which are the staples needed by business owners.

Why You Should Take Out a Business Owners Insurance Policy

Small business owners can’t do without insurance. It’s an unavoidable cost of doing business. Here are examples of when BOP insurance is needed:

You operate out of a physical location. You have equipment and/or inventory. You store data with customer information.
You run your business from home. You might have equipment or inventory, or you might not. Additionally, you store customer information in your data.
Your business operations take place on someone else’s property. For example, you’re a landscaper or contractor. You need a BOP if your business has potential risks of damaging someone else’s property – your lawnmower shoots a rock through a homeowner’s window.
Customers visit your place of operation, whether it’s a physical location or your home. Customer injury is a possibility.
It’s possible that an equipment breakdown and/or loss of inventory would mean a loss of income.

What is Covered by a Business Owners Insurance Policy?

Here’s how business owners’ policy insurance offers coverage. Keep in mind that you can tailor a business owner’s policy (BOP) by adding extra coverages to suit the specific needs of your business:

General Business Liability Insurance

This type of insurance covers you for damages to someone else’s property or personal injury (bodily injury, including medical expenses). This general liability insurance should also provide assistance with legal costs should you be sued due to bodily injury of a customer, which occurs on your property or product-related claims. General liability insurance also covers you for “advertising injury” – for example, you’re accused of copyright infringement for an image you use in advertising. Coverage includes your legal defense costs.

Commercial Property Insurance

This type of insurance protects against the loss of business equipment or property, regardless of whether it is owned or leased. It encompasses property damage to the building itself, as well as items such as office furniture, inventory, and equipment. Typically, there are two types of policies in this category: standard and specialized. With a specialized policy, you have the option to broaden the scope of covered losses.

Business Income Insurance

In the event of property damage, equipment damage or breakdown, or inventory loss, income insurance means that lost income will be replaced. That type of coverage helps you stay afloat if you need to meet payroll obligations, pay rent or mortgage, utilities, etc. This is often called business interruption insurance.

Computer Software/Professional Services

This type of insurance provides coverage for various risks, including data breaches, compromises of customer data, failures of electronic equipment or software, identity theft, and the loss of data or important documents related to the business. Known as cyber liability insurance, it safeguards you in the event of a data breach that leads to the exposure of clients’ personally identifiable information. Additionally, policies may offer protection against employee dishonesty that affects your financial situation.

What Is Not Covered by BOP Policy?

Unfortunately, despite the broad coverage provided by a business owner’s policy BOP, you are likely to need additional protection from other types of insurance policies, especially if you have employees:

Commercial auto insurance is not included in a business owner’s policy insurance, but it can be added to a Commercial Package Policy (CPP). More details on that will follow later.
Errors and Omissions (E & O) insurance – Protects you against mistakes made while delivering professional services. For instance, if you’re a surveyor and you incorrectly assess property boundaries, this coverage can be crucial. It is commonly known as professional liability.
Employment Practices Liability Insurance (EPLI) – If you have employees, this protects you against lawsuits brought by them regarding things such as wrongful termination or harassment.
Hazard Insurance – Provides property coverages for outdoor business property, such as fencing and signage. This type of insurance covers you for damages caused by natural disasters.
Disability Insurance – This coverage is inexpensive and covers you should you get injured or ill.
Workers compensation – If you have employees, you must provide workers’ compensation insurance. This policy covers their medical costs for work-related injuries.

How Much is Business Owners Policy Insurance?

There are several factors that influence the costs of business owners’ policy insurance (BOP). For instance, rates differ between small and medium-sized businesses. Additionally, the cost is affected by several elements, including the type of business, the required property coverage, the property location, the liability risks associated with the business type, the necessity of commercial building coverage, the types of business products, the optional coverages selected, and more.

As a general figure, you can expect a monthly cost ranging from $500 to $2,000, according to figures from the Insurance Information Institute.

How to Choose the Right Business Owner’s Policy Insurance

Ready to get started with your business owner’s policy BOP? Here are some steps to follow:

Assess your risk and rank covered liability losses.
If you run a business from your home, review your homeowner’s policy or renter’s insurance policy to determine what is covered.
If you employ individuals, make sure to specify the extra policies required, including worker’s compensation and EPLI.
List business property (equipment and inventory) and calculate a dollar amount.
Estimate the time it would take you to recover due to loss of equipment or inventory.

Look into disability insurance. You may be required to have it in order to get a BOP.

How to Get BOP Insurance

Assemble all your information so you’re ready to contact an insurance company.
List the coverages you need, especially additional coverages that won’t fall under the BOP umbrella.
Before calling a broker, insurance company, or local agent, do some networking. If you’re a member of your local Chamber of Commerce, start asking questions with contacts there. Find out what choices other business owners have made – those that operate the same type of business or operate in your area. Which insurance company do they recommend? Is there an insurance company name that is most frequently lauded?
Contact each insurance company and make comparisons. Don’t compare only by price – compare by coverage as well.
Compare the “second umbrella.” The BOP is an umbrella for liability and property. An insurance company may group your BOP and the additional coverages. Make sure the company has policies for all the types of coverage you require. Grouping policies with one carrier should lead to cost savings for you.

What’s the Difference between general liability insurance and business owners’ policy?

The BOP includes general liability plus property/equipment protection, business interruption insurance, and loss of data/data breach protection.

What is the difference between a commercial package policy and a business owner’s policy?

The commercial package policy is business insurance, which includes general liability and property. What’s different is what can be added to the CPP.

With the CPP, you can include business vehicles under a commercial auto insurance policy. Additionally, you have the option to add coverage known as Inland Marine, which provides protection for items that are in transit over land (Inland).

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