Q: Is There a Comprehensive Insurance Policy that Covers All My Risks?
A: There’s no such thing as a single policy that covers all your risks. But that’s good news. You might think buying one policy would save you time and money. However, a policy that covered every feasible risk would end up being a fortune, and you’d spend a lot of money on coverages you don’t even need. That’s why business insurance policies are divvied up based on certain risks. This allows you to purchase an assortment of policies that you actually need and skip the ones that don’t apply to your business. For a small-business owner who must be vigilant about their bottom line, it’s the most cost-effective solution.
Comprehensive Small Business Insurance: The Details
“Comprehensive” is a word that many insurance professionals avoid. The fact is no policy covers everything, so it’s more useful to think about coverage in terms of what your risks are.
Most small businesses don’t require a lot of different policies to be adequately protected. Usually, General Liability Insurance and Property Insurance are a sufficient starting point, and most insurance companies bundle them together as a Business Owner’s Policy, or BOP. You’ll spend less on a BOP than you would if you bought both policies individually.
The General Liability portion of your BOP kicks in when someone who doesn’t work for you sues over certain injuries. For example, a client might claim that you, your employee, or your product is responsible for…
- Their damaged property.
- A bodily injury they suffered on your premises.
- Slander, libel, or copyright infringement.
When that happens, GL Insurance can cover the cost of your legal defense and settlements or judgments.
Commercial Property Insurance can cover the cost to repair or replace your property when it’s damaged by fire, theft, vandalism, or windstorms. It can insure…
- Office space.
- Furnishings and fixtures.
Depending on your industry, these policies packaged into a BOP may provide adequate coverage for your small business.
How to Select the Policies that Fit Your Small Business
Though no policy is comprehensive, some policies offer more coverage than others. For example, when you buy Property Insurance, you can choose between…
- Named-peril coverage, which covers only the events specifically listed in the policy. For example, if the sewers in your office back up, your Property Insurance would only pay for the damages if “backed-up sewers” were listed in your policy. A named-peril policy tends to be less expensive than an all-risk policy, but it places the burden of proof on you (i.e., you have to show that one of the named perils caused the loss).
- All-risk coverage, which covers all events except those named in the policy. The events listed in the policy are called exclusions, and you would not receive compensation when these events occur. Common exclusions are war, floods, and earthquakes. Because more events are included, all-risk policies typically cost more than named-peril policies.
When it comes to General Liability, your industry may determine how much coverage you need. For example, you may increase your GL’s Product Liability coverage if you manufacture children’s toys. That way, if your product causes a child physical harm, you have the means to deal with an expensive lawsuit. Learn more about this coverage in the post, “What Is Product Liability Insurance?”
To start pricing your General Liability Insurance, Property Insurance, and BOP options, submit an online application today.