As a business owner, one of the biggest challenges you will face is choosing the right coverage for your business. Deciding which coverages you will need, and at what levels, can be a daunting challenge, especially for new businesses with limited experience accessing insurance risks and limited financial resources. Fortunately, many insurance brokers can help take the confusion out of selecting the right insurance by offering you a bundled portfolio of insurance options known as a Business Owners Policies package, or BOP.
Why choose a BOP versus traditional, individually acquired insurance policies?
BOPs are a combined package of policies that cover the most common protections from all major liabilities and potential losses your business may face and combining them into one single package. BOP packages generally include the key types of insurance your business needs bundled into a single package targeted at your specific type and size of business. Since a BOP bundle offers multiple coverages, the cost of premiums to the businesses is generally less than buying individual policies for each type of coverage.
Businesses who purchase insurance as an integrated BOP package also gain the many advantages of one-stop shopping for insurance such as a single contact point for all their insurance needs. This allows easier management of both premium payments and claims processing in the event of a loss.
Here is a list of the three major types of coverage generally offered as part of a BOP:
Property insurance: This insurance covers all buildings owned by the business against loss due to such things as fire, severe weather, or other hazards. Coverage also includes all building contents, such as inventory, business supplies, equipment, and furniture. In addition, property insurance generally comes in two types: basic, which covers common hazards, and special, which allows the business owner to add more extensive coverage for hazards not covered under basic property insurance. Special insurance options vary but generally cover all hazards not specially excluded from the policy. Exclusions generally include such things as flood, terrorism, civil unrest, war, and nuclear accidents.
Business interruption insurance: If your business was unable to operate due to fire or other covered event or catastrophe, business interruption insurance would cover any financial losses caused by interruption of business operations until such time as the business can resume operations. Some policies will also compensate your business for the cost of temporarily relocating operations following a loss that causes your business to be unable to operate at its primary site. Business interruption insurance can play a critical role in helping your business stay in business following a catastrophic loss.
Liability protection: We live in an extremely litigious society where businesses can be sued for the thinnest of reasons. Liability protection protects your business against lawsuits by covering your company’s legal liability in the event that your company causes harm or financial loss to another party or individual. In its most basic form, liability insurance covers harm, such as bodily harm or property damage, that your company or company employees may cause others due to actions or inactions committed against a third party. This includes such things as damages or losses caused by defective products, faulty installations, or damage to someone’s property.
While BOP insurance does coverage the three most common – and important – types of insurance critical to any business, there are also a few types of insurance that your business may need that are not included.
These include:
- Vehicle insurance
- Professional liability insurance
- Workers compensation insurance
- Employee health, dental, or vision insurance
- Employee disability insurance
These types of insurance would need to be purchased separately to ensure that your business, and your employees, have the full insurance coverage that is needed.
Contact our experienced team of business insurance specialist today to see if BOP is right for your business.
