Examples of BOP Insurance in Action
A Business Owner's Policy (BOP) covers you from numerous expenses that could bankrupt your business. This policy offers so much coverage because it's actually an insurance bundle containing two different policies:
- General Liability Insurance. Pays legal expenses for covered lawsuits brought by people who don't work for your business.
- Property Insurance. Reimburses businesses when their commercial property is damaged or destroyed.
With its wide range of coverage (and lower cost), a Business Owner's Policy is essential for many small-business owners. But the best way to understand how this coverage works is by taking a look at BOP claims in action.
BOP Lawsuits: Small Business Insurance Case Studies
Because the General Liability Insurance portion of a BOP covers common lawsuits, let's take a closer look at those situations. Here are some examples of the coverage a BOP offers:
- Example #1: Slip-and-fall lawsuits. A client visits his accountant's office to drop off tax documents and receipts. While walking into the waiting room, he trips on the rug. Documents go flying. When the client struggles to his feet, he can barely walk. X-rays reveal that he's broken his ankle and damaged the tendon. He sues the accountant for $100,000 in medical expenses, pain and suffering, and other damages. Naturally, the accountant is good with risk management and invested in a Business Owner's Policy for the firm. With the help of a lawyer, the accountant and the client are able to resolve the dispute out of court for $80,000. The BOP covers this settlement and the lawyers' fees, about $87,000 in total.
- Example #2: Property damage lawsuit. An IT contractor is installing new computers at a video editor's office. While setting up a new dual-monitor system, the contractor trips over a cord, which sends the monitors and tower crashing to the floor. The client sues the IT contractor for the cost of the computers and destroying part of an expensive editing studio. The total damages come to $15,000. Luckily, the contractor has a BOP, which pays for these costs and the associated legal fees.
- Example #3: Advertising injury lawsuit. A pet grooming business is well known for its social media presence. On the business's Facebook page, the business owner regularly posts "before" and "after" pictures of the dogs she grooms. One day, she posts a photo of a Pomeranian and its owner, a regular customer. The customer's boss sees the photo tagged on Facebook and fires her because she was supposed to be "too sick" to work that day. In an attempt to recoup losses, the customer sues the groomer for "misappropriation" because the groomer used her image without her permission. The damages total $60,000, and the groomer's BOP covers it all.
BOP Property Claims: Small Business Insurance Case Studies
The Commercial Property Insurance portion of a BOP can insure various types of commercial property including…
- Mobile devices.
- Owned office space.
Let's take a look at a couple examples that show how a BOP can reimburse businesses when their property is lost:
- Example #1: Fire damage. A fire breaks out overnight at a sporting goods distributor. Firefighters are called to the scene. They battle the blaze, but not before the majority of the distributor's inventory is destroyed. Baseball bats, basketballs, and uniforms are now a charred mass. In the course of a few hours, the distributor loses $100,000 worth of items. It will cost another $100,000 to repair the building. The company's BOP covers the total bill ($200,000) and includes Business Interruption Insurance – a policy that covers up to six months of lost income while the distributor rebuilds.
- Example #2: Theft. A marketing firm is robbed over the Christmas holiday. The thieves smash a back window and make off with $50,000 worth of computers, office equipment, and other valuables. The firm's Business Owner's Policy covers the cost to buy replacements for the stolen items.
BOPs often cover other types of property loss, such as damage due to some weather events. Always be sure to check your policy to make sure you understand what is and is not covered.