Have you ever seen one of those commercials for a hair care product that claims it’s shampoo and conditioner, all in one? Believe it or not, there’s an almost-equivalent for small-to-medium sized businesses when it comes to business insurance. It’s called a business owner’s policy, but since no cool coverage is complete without a nickname or acronym, it’s called a BOP. Basically, a BOP is handy to have because it combines several coverages into one convenient policy. You can get the coverage you need for your business in a simple, neat package – and it’s way better than 2-in-1 shampoo/conditioner.
Let’s dig deeper into this insurance mystery.
What does a business owner’s policy include?
There are three main coverages that a BOP bundles together for your insurance convenience. Those coverages are…
1. Commercial property insurance.
What it does: Commercial property covers losses that happen because of common perils, like fire. It will cover you for your office equipment, furniture, inventory, machinery, raw materials, computers and other such essential business items. Plus, you know, the building itself.
2. General liability.
What it does: General liability is your “slip-and-fall” insurance. It covers your legal responsibility if your business causes harm to someone else, up to your policy’s limit. It will usually cover attorney fees for defending your business in court and the medical fees of anyone to whom your business caused bodily harm or property damage.
3. Business interruption insurance.
What it does: Business interruption puts lost income back in your business’s pocket if you get hurt by a covered disaster that causes you to close temporarily. While property insurance helps you rebuild your business, BII helps you make sure that there’s still money in the bank when you have your grand reopening. It reimburses you for lost income.
Together, these coverages form the foundation of a small business insurance plan. Of course, they don’t cover every disaster or loss that could befall your business, so you may have to consider getting additional coverages if necessary.
Is my business eligible for a business owner’s policy?
Now, not every business is a candidate for a BOP. As we said before, BOPs are most appropriate for small to mid-sized businesses. Apart from that, there are a few checkmarks your business needs to earn before being stamped for BOP approval.
Your business must have…
- A physical location (whether it’s your home or premises – you may be able to insure a home-based business with a BOP)
- Property that can be swiped (think product, cash, furniture, digital property, etc.)
- Risk of lawsuits
- Fewer than 100 minions employees
- Fewer than $5 million in sales annually
Aside from these basic qualifications, there are a few other things that a carrier will consider before declaring you BOP-worthy. You may or may not be BOP-able depending on your type of business, the size of your main location, your revenue, and the class of business you are. It might seem like a lot of hoops to jump through, but it’s all in the interest of making that your business has the coverage you need.
How much will a BOP cost?
The premiums for BOPs depend, of course, on a few things. Your business’s eligibility factors play a part in your insurance rates. The financial stability of your business does, too. The building itself also gets considered, as do security features and fire hazards. The general rule of thumb for insurance is the more risk you have, the higher your rates. Insurance companies are highly allergic to risk, remember.
Pro tip: You might qualify for a discount if you have a security system. However, there are a few things you should know before hiring a company to install a commercial security system.
While insurance rates vary from business to business, the bottom line is that it’s important to make sure that you have enough coverage for your business and that there are no gaps in your insurance. That might mean adding some extra coverage to a business owner’s policy or forgoing a BOP entirely in favor of getting bigger policies.
BOPs are great when it comes to protecting small businesses. If you’re BOP-able, you get to enjoy commercial property, general liability, and business interruption insurance all bundled into one convenient policy. It is, however, important to consider that you may need to add coverages to your business owner’s policy. If you think your business might be a candidate for a BOP, congratulations! Insurance just got a whole lot easier.
Want to get a free quote on your business insurance? BOP or no BOP, we’d love to help you find the insurance your business needs to protect it from the risks you face every day. We’d love to help you save on said insurance, too. To reach one of our friendly agent-folk, all you have to do is fill out our online quote form or give us a call today. Then we can help you get started with getting your insurance!