An Overview Of Business Owner’s Policy

Businesses need different forms of insurance coverage. A business owner's policy (BOP) is arguably the most fundamental insurance for small and medium businesses. The BOP incorporates liability and coverage. Many businesses use BOP instead of separate liability and property coverage. Below is an overview of BOP and its unique features.

It Is a Package Deal

A BOP combines two major forms of commercial insurance: property and liability insurance. Most businesses consider both forms of insurance necessary. For example, premise fire damage can cripple your business if you don't have adequate resources or insurance. A client's product liability claim can cause you considerable resources in terms of legal fees and claim settlement.

It Is Only Available for Certain Businesses

Insurance companies limit BOP insurance to low-risk companies. In most cases, the insurance is only available to businesses:

  • With relatively few employees
  • That operates in a low-risk industry
  • With a low annual income
  • Has a small office or premises

For example, a small IT company is a relatively low-risk business that may qualify for BOP insurance. The exact eligibility criteria depend on the insurance company. You will know the exact number of employees an insurance carrier's BOP covers when you ask for quotes.

It Is Relatively Inexpensive

Small businesses love BOP insurance because it's relatively inexpensive compared to separate property and liability policies. For example, a small startup can use BOP to cover their major risks without worrying about the premiums inflating their operating costs. The rates will vary by the insurance company, revenue, industry, and the number of employees, among other factors.

Has Low Limits

Insurance companies use risk analysis to calculate premiums. The risk rating determines the likelihood of claim filing and the maximum payout the insurance company may pay per claim. Thus, low insurance rates often go with low limits. Many companies that qualify for BOP insurance don't consider the low limits a big deal since their claims are usually small too.

Allows Opt-in Coverage

A BOP insurance policy specifies the coverage and exclusions. For example, professional liability is a common exclusion. Some businesses might consider the standard coverage too restrictive. Thus, many insurance companies offer riders or add-ons to their standard BOP offers. Thus, a business can evaluate its business risks and purchase relevant additional coverage.

Hopefully, you have the right insurance for your business. Contact a commercial insurance agency to review your policy to confirm your coverage and help you buy additional coverage. Remember to review your insurance coverage regularly to accommodate the changing needs of your business and industry.