The Business Owner’s Policy: Affordable Insurance for Small Businesses

24. March 2014 08:43

Building flames

If you're a small-business owner who wants to build an affordable and reliable business continuity plan, a Business Owner's Policy is a good place to start. Also called a "BOP," this policy offers eligible businesses several essential coverages at a discounted rate, including:

Read on to learn how a BOP reduces your premiums, allows you to customize your coverage, and keeps your business protected.

How a Business Owner’s Policy Can Cut Down Your Coverage Costs

A Business Owner's Policy assembles basic coverages in one bundle. Packaging these fundamental policies together allows providers to sell BOPs at a premium less than the total cost of the individual coverages. That's why if you're looking to save money on your business insurance, a BOP is one of the first options you should explore. (For more ideas about how to reduce your business insurance premiums, take a look at "The Small Business Guide to Cutting Insurance Costs.")

Not only can your BOP cut your premiums costs, but it can also cover the following:

Property Claims

When you have a BOP in force, you'll have financial protection for property damage or losses. You policy can cover your essentials, such as your commercial building, furniture, equipment, inventory, and supplies. Common claims typically involve loss or damage caused by…

  • Vandalism.
  • Lightning.
  • Fire.
  • Windstorms.
  • Power surges or outages.

Regardless of whether you rent or own your business space, your BOP's Property protection offers the means to repair your damaged building and replace its contents so you can get back to work quickly after an unexpected disaster.

General Liability Claims

Your BOP also protects your business when a third party (i.e., anyone who doesn't work for your company) sues you over…

When faced with one of these lawsuits, General Liability can cover your legal defense fees, settlements or judgments, and other court costs.

Business Interruption Claims

If a covered Property claim forces your business to close its doors temporarily, you'll want to have Business Interruption Insurance (BII) at the ready. Some BOPs include BII, while others must have the coverage added on as an endorsement. Business Interruption Insurance can help you pay for ongoing expenses when you can't generate revenue. These costs may include…

  • Payroll.
  • Rent or lease payments.
  • Taxes.
  • And more.

Business Owner’s Policies: Where Affordability Meets Versatility

One of the perks of having a Business Owner's Policy is that you can customize your plan with endorsements and riders to cover your business's specific risks. For instance, you may consider incorporating the following riders into your BOP:

  • Broad Form Water Damage. This endorsement covers loss or damage to your commercial building caused by water backups or water below the surface of the ground that leaks into your building.
  • Computer Fraud and Funds Transfer Fraud. If you need insurance against the theft of money, securities, or property by using a computer, ask your agent about this rider.
  • Business Income Extension from Websites. If your Internet business operations are interrupted, this endorsement can reimburse you for lost income under certain circumstances. Ask your insurance agent for more information.
  • Spoilage. If you sell perishable products such as food or flowers, this endorsement can protect you from losses when an equipment breakdown, contamination, or power outage causes your products to spoil.

Though not an endorsement, Umbrella Insurance (also known as Excess Liability Insurance) can also extend your BOP protection. This policy allows you to draw on millions more in coverage when your General Liability limits have been reached and you need additional compensation.

Who Can Purchase a BOP?

Business Owner’s Policies aren't available to everyone. Because they are designed for the needs and budgets of small-business owners, providers put some restrictions in place. Typically, eligible businesses…

  • Have small commercial premises. If your business occupies a large commercial building, you may need more property and liability coverage than standard BOPs offer.
  • Are considered "low risk." If your business has high-risk operations or offers highly specialized services, your liability coverage needs may be higher than a BOP can provide.
  • Only need a years' worth of Business Interruption Insurance. If you need more than 12 months of coverage, talk to an insurance agent about taking a different approach to your coverage.

To find out if your business qualifies, apply for a Business Owner's Policy quote online.

This post is part of an ongoing series about saving money on business insurance. Stay tuned to learn more about how to cut your coverage costs and still keep your business adequately insured! 

protect your assets

Customer Rating 4.9 out of 5
Read Customer Reviews