Basically, three types of insurance are available to protect your business: property, liability and workers' compensation. Workers' compensation insurance is required by law in all 50 states. Although property and liability insurance are not always mandatory, it makes sense to protect all of your company assets with property and liability insurance.

 

Most of the coverages that are needed by small and medium sized businesses, with the exception of auto and worker’s compensation, are generally included. This not only simplifies the process of buying the basic insurance coverages, but often gives a lower premium for businesses that qualify for a BOP. Business owner’s policies basically consist of property coverage, liability coverage and some additional types of coverage that most businesses require. Optional coverages can also be added to meet specific needs of the business.

The General Liability insurance coverage of a BOP is comparable to a typical Commercial General Liability (CGL) policy, providing protection against claims of bodily injury or property damage for which your business may be liable.

The General Liability portion typically provides liability insurance for the cost of defending lawsuits stemming from:

• Accidents that cause bodily injury and/or property damage.
• Claims such as libel and slander.
• False advertising

*General Liability insurance does not cover errors or negligence from professional services.

A BOP Insurance policy may include, or you may be able to select as an option;

• Outdoor Sign Insurance
• Money and Securities Insurance
• Employee Dishonesty Insurance
• Water Back Up Insurance

Typically a BOP policy includes:

1. Property insurance (covering buildings, equipment and inventory).

2. Business interruption insurance (covering losses that cause you to shut operations or reduce production for a time). Business interruption insurance can provide money to offset lost profits or to pay continuing expenses (typically for up to a year for insured losses).

3. Casualty or liability protection (covering harm done by the employees or products to other people or their property).

4. Crime insurance (covering loss of money or securities resulting from burglaries or robberies or destruction) as well as losses from employee theft or embezzlement.

5. Liability insurance covering lawsuits arising from accidents (as when someone trips and falls on your business’s property) or when you sell a product that damages the customer’s property or you are accused of offenses such as slander, copyright or invasion of privacy.

6.Vehicle coverage for rented or borrowed vehicles.

A number of other coverages such as flood insurance or earthquake insurance or owned vehicle coverage and specialized liabilities are generally not included in POBs. Some of these may be available separately for extra premiums.

One of the distinguishing features of BOPs is that most automatically include business income and extra expense coverage (subject to some limitations).

 

Business owner's policies (BOPs) are insurance packages that provide both property and liability coverage at one affordable premium. These packaged policies are available to most small and medium-size companies and can be a good alternative to purchasing separate policies for liability and property insurance.

 

Large companies and businesses that are considered high risk usually don't meet the criteria for a BOP. The criteria for BOP eligibility include the size of the premises, the required limits of liability, the type of business and the extent of offsite activity. Premiums for BOP policies are based on similar factors, including business location, financial stability, building construction, and security features and fire hazards.

 

What Does a BOP Cover?
A BOP includes property protection for an office building and its contents as well as other people's property brought into the office building. BOPs cover standard perils, including fire and theft, although certain exclusions apply, such as damage caused by floods and earthquakes.

Under a BOP, a business selects the amount of liability coverage it needs based on its assets. Liability coverage pays for the cost of defending the business in a lawsuit and pays damages if the business is sued for injury or property damage. The liability policy also pays the medical expenses of those injured, other than employees, as a result of business operations.

A BOP provides coverage for both business interruption and replacement costs if an emergency disrupts or destroys the business. Business interruption insurance not only compensates for lost income and the expenses incurred when a company is forced to vacate its premises due to disaster-related damage, but it also covers operating expenses, such as payroll, which continue even when business activities have ceased. Replacement-cost coverage pays to replace damaged or stolen property, equipment and inventory without deducting for depreciation.

In addition to the basic BOP policy, businesses may purchase add-on coverage based on the particular risks associated with the company. For example, a dry cleaner might purchase additional coverage for mechanical breakdown, which would cover the machinery the business relies on. A retailer with numerous employees might carry coverage for employee dishonesty, which covers loss of business property due to embezzlement, fraud or another criminal act.