Every business owner deserves to have insurance benefits that are both cost effective and guaranteed to offer you protection against any number of commercial liabilities. Therefore, a strong commercial insurance portfolio is going to be made up of numerous policies, each of which will offer different types of coverage. Still, you shouldn’t have to face the hassle of juggling multiple policies at one time. To help minimize this challenge, consider investing in a Business Owners Policy (BOP).
BOPs are very convenient insurance solutions for most small businesses, because they help them achieve several essential pieces of coverage in one package. They also have coverage limits and pricing strategies that are optimized to fit the needs of smaller operations.
Still, BOPs are not all-encompassing, and they don’t cover every potential commercial liability. Therefore, you have to take a comprehensive look at your own insurance needs when determining whether a BOP is actually the best coverage solution for your operation.
Understanding BOPS
Because there are many insurable assets and liabilities associated with any business, most will need several different types of commercial insurance in order to fully cover themselves. However, small business owners shouldn’t have to deal with the extra challenge of coordinating, aligning and paying for numerous policies. They have enough to deal with just trying to run the business, after all.
With a BOP, you’ll be able to receive several different types of coverage, in one place, that will insure the essential assets and liabilities tied up within your operation. Therefore, you won’t have several policies floating around just to garner that fundamental protection. Instead, coverage will exist in one place, and the policyholder also pays one premium. For the business owners with convenience and affordability in mind, BOPs might seem a perfect fit.
Standard BOP Coverage Options
Even though BOPs can vary from insurer to insurer, they usually contain three to four essential pieces of coverage. These include:
· 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 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 coverage element.
· 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 in the course of business. It can also assist you in case of legal action against you.
· Business interruption coverage: If a serious incident occurs in the business, then you might have to close temporarily. Yet, though you might close, operating costs like salaries and utility bills might still beckon. This coverage might help you still pay those costs until you can reopen and start making money again. Coverage might also pay for temporary relocating the operation.
Each piece of coverage will include its own coverage limits, deductibles, exclusions, endorsements and other terms. That way, you’ll be able to tailor your benefits to properly cover your full financial investment in your operation. Therefore, in the event of a devastating problem, you’ll be able to use your coverage to minimize your personal financial loss.
It Doesn’t Cover Everything
It’s important to use scrutiny when putting together your BOP. The fact of the matter is that a BOP alone will not often cover your business fully, even though its coverage is expansive. Therefore, you will often have to enhance it with either specialized coverage endorsements or supplementary insurance policies. Some of the additional benefits that you might need includes:
· 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.
Furthermore, if you want additional liability insurance, then consider investing in commercial 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. You often must purchase an umbrella plan separately from your BOP, though it will apply to the coverage within.
Additionally, commercial auto insurance, workers’ compensation insurance, group health benefits and other policies will prove essential to your business’s operations. You must buy these benefits entirely separately from the BOP, too. Still, you can depend on the BOP to be the foundational starting point in helping you get optimized business insurance for your smaller operation.