Business Owners Policy: Best Insurance to choose for Small businesses
Owning and managing a business is tough work, albeit rewarding. The goal of every business owner is to minimize risks and maximize results. There are a lot of variables that can disrupt a business, and as a business owner, you should prepare for the worst.
A Business Owners Policy is made to lessen your hardship when it comes to accounting for the variables. It is an insurance policy designed to help small to medium businesses by providing them a comprehensive insurance package. Lets review!
What is a Business Owners Policy?
A Business Owner’s Insurance bundles two or more business insurance policies into one package. Most commonly we see Business Owners Policy as a combination of general business liability insurance and property insurance. The advantage of Business Policy Insurance is that the whole package costs less when compared to buying these individual insurance policies separately.
If you want to have additional coverage from BOP insurance, then you can opt for additional riders or extension plans.
What does a Business Owners Policy Cover?
A Business Owner’s Policy provides coverage for commercial property damage, general liability coverage, and business interruption coverage. The total coverage can be summed up by expanding on these individual coverages. Let us discuss the different aspects of a Business Owners policy:
1. Commercial Property Insurance
Provides coverage for buildings that have been affected by some event (which is mentioned in the insurance declaration). Typically, commercial property insurance covers for damage that arises from theft, fire, explosion, etc.).
The property in question is buildings and machinery owned by the business. This also applied even if you have rent out the space for your business. Commercial property insurance also provides coverage for valuables owned by a third party but kept within the premises of the business for safekeeping.
The commercial property insurance coverage works by paying for the replacement for the damaged items or in cash value. To get additional coverage from events like earthquakes, you will have to upgrade from the basic plan and choose a more comprehensive option.
2. General Liability Insurance
General Liability insurance provides coverage for the common liabilities that may cost a business like medical expenses, attorney fees, etc. It can also be defined as an insurance policy that provides coverage for damages caused by the business on another entity, and it may be financial damages or bodily harm.
General liability insurance is important for a business as it covers the business for most legal charges, investigations, settlements, etc.
The General Liability Insurance covers the claims filed by an employee injured by your business practices. It also covers the costs like repair costs incurred on your business if an employee accidentally damaged a customer’s property.
3. Business Interruption insurance
A business interruption coverage provides monetary compensation for the time the business was not able to generate income due to some calamity or a particular event. If such an event causes the business to operate out of a temporary location, the insurance may even provide coverage for that.
The insurance policy provides coverage based on the past month’s revenue of the business. The policy helps to cover the standard expenses and extra expenses (which are reasonable) until the business is in a better position.
Why should you choose Business Owners Policy?
As we discussed, the primary goal of a Business Owners Policy is to provide comprehensive insurance coverage for the business owner. This is a smart choice because you will have to pay a bigger amount if you were to pick these policies individually. Now let us look at things at a business level to see the importance of business owner’s policy.
Your business may face legal action: If your business operates in a way that there can be workplace-related injuries or hazards, then your business might face legal action from the employee. A BOP will provide coverage for the legal charges in such an event. The policy also provides coverage for customer or client’s lawsuit
Your business has high-value assets that may get damaged or stolen: In this case, assets can be Machinery, raw materials, finished products, or anything that carries value. In an event where your assets are stolen or damaged, a BOP will provide coverage for its replacement or in its cash value.
Your business is located in a high-risk area: Things like a fire breakout come unannounced. And in most cases, we see businesses suffering a lot when it does happen. Sometimes, the business owner may be pushed to set up their business in a high-risk area. In such cases, Business Owners Policy gives them the much-needed confidence that they can get coverage if anything dire were to happen.
What all are not covered by Business owner policy
As you learn about the advantages of BOP, it is equally important to know the areas that are not covered by a Business Owner’s Policy. BOP does not cover:
- Accidents or damages that are caused intentionally
- Employee injuries
- Automobile damages during transit
Some BOP does not cover damages caused by floods or earthquakes, however, you can buy special packages that cover such events for a small premium.
How much coverage should I choose?
The amount of coverage that you choose will determine the maximum amount the insurer will grant you in case of a claim. Hence, before you choose a coverage amount, make sure that you evaluate the business’s worth. You must also factor in the safety mechanisms you have put in place to minimize the damage in an event where something was to go wrong.
A Business Owners Policy is a great option for small to medium businesses. While you are starting your business, risks may arise, and your business might not have the necessary financial backing to fight through something a court case or survive through an expensive theft. A Business Owners Policy provides the much-needed support to keep your business afloat.
If you need more info on Business Owners Policy or want to know how it helps your business, then contact us today! We are happy to help!