If you own a business, you know how much work it takes to see your dream become a reality. You work to get funding and get it off the ground, and then it’s a constant input – emotionally, physically and financially – to see it continue to grow.
But all it takes is one unforeseen event for a business to take a hit it can’t recover from. There are over 100,000 commerical fires annually, and over 100 million lawsuits filed against businesses. If you’re not careful, all that hard work could be for nothing.
Luckily, you can protect yourself and your investment. If you’re wondering, “What is BOP insurance?”, keep reading.
What is BOP Insurance?
A business owner policy, or BOP, is a bundled insurance policy with multiple coverages sold at a premium.
Insurance policies are sold as different types of coverage, usually separately. A business owner policy takes multiple basic coverage types and bundles them together. It’s a more efficient and generally cheaper option than electing separate coverages.
Insurance providers look at criteria such as location, the size of the business and income to determine if the business is eligible for BOP insurance. If it is, they can purchase a standard BOP or supplement it with one of many add-on coverages for a specialized policy.
What’s Included in BOP Insurance?
BOP insurances are generally tailored for small to medium-sized businesses. Most business owner policies have the same base coverages – property, business interruption, and liability.
Property
Property insurance is the base of a BOP. It covers your physical property, from buildings to production equipment to products at your facility.
The coverages are for specific events lined out in your policy, called named perils. These generally include fire, explosion, wind, vandalism, and smoke damage. If the coverage isn’t specifically named, it won’t be covered.
The property covered by a BOP will generally include and buildings, whether owned or rented, and any in-progress additions being done. If you rent your building, the building owner will need to be listed as an additional insured on the policy.
It also covers business-owned items or items in the care of the business, as long as they are stored at the business or within a specific proximity, such as within 500 feet of the business. This means that rented or borrowed equipment you might be using for an event or promotion would also be covered.
Business Interruption
If a catastrophe such as a fire temporarily disrupts your business operation, business interruption insurance will cover the loss of income. It can also cover additional expenses, such as having to find a secondary location to operate out of while the affected location undergoes repairs.
In the event of a catastrophe like a fire, most business owners are well aware of the damages that would need to be repaired. But many forget about the time and lost income that accompanies a temporary loss of location if they can’t continue to do business as usual.
Business interruption insurance policies make sure that just because your normal business might be temporarily suspended, the business (and you!) won’t financially suffer as a result.
Liability
Liability insurance covers you legally for any damages the business may bring to others. However, there are parameters within this portion of the BOP.
The damage must be inflicted during the course of normal business operation, where faulty equipment, defective products or problems with services are to blame.
Liability insurance coverages vary based on provider. Many will not include coverages for personal or professional liability within a BOP. Those are considered additional coverages.
Additional Coverages
Additional add-on coverages can be added to a business owner policy for more specific and comprehensive coverage. Coverage for business-owned vehicles, crime-related insurance or flood insurance are examples of this.
Reasons a business owner might choose additional coverages include certain crimes that are known to that industry or location, product spoilage, technical equipment, or machinery breakdown.
Additional coverages not typically found on a BOP include professional liability, or damages inflicted through professional services, workers’ comp, and health and disability insurance. You would need separate, individual policies for those specific coverages.
An insurance agency skilled in business owner policies can help make sure you have the right coverages for your specific needs.
Does my Business Qualify for BOP Insurance?
Only certain businesses qualify for business owner policies. Since they are specifically designed for small to mid-range businesses, most insurance companies have caps on size and income that you must fall under.
Typical caps for a BOP are a building size under 25,000 square feet and under three million in annual income.
Most business owner policies will only cover businesses that do all their business on their own premises. Businesses that typically fall within these parameters are restaurants, retails stores that sell merchandise, small apartment buildings, and office-based businesses.
Find the Best Business Owner Policy for Your Business
If your business were to suddenly catch on fire, a business owner policy could mean the difference between watching your dreams go up in flames with no hope of being rebuilt and a new start to build it bigger and better.
A BOP is a tidy way to have all your insurance needs covered under one policy for a better price than purchasing different coverages separately.
If you’ve been wondering, “What is BOP insurance and do I need it?”, it’s time to talk to a licensed insurance agency skilled in business insurance policies to make sure your business is covered in case of an unforeseen event.
Call Amistad Insurance Services today to learn what a BOP can do for your business!
