Among the most popular business insurances, one is the Business Owner’s Policy (BOP) designed in combination with business liability and business property insurance. BOP insurance ensures coverage of a business from claims caused by things like floods, fire, theft, and other disasters as covered in the policy.
While big businesses consider a variety of business insurance policy coverage for their comprehensive risk management, for most startups and small businesses BOP is the first choice to get started. Accordingly, the business owner can opt for insurance coverage on other areas that may arise during its ongoing operation, says Charles Spinelli.
Why is BOP a Unique Option for Small Businesses?
A Business Owner’s Policy is a business insurance plan that can be customized as per the unique needs of businesses. The owner can consider them as add-on insurance coverages down the line. This makes it a great option for businesses regardless of their size, especially for small businesses.
What Does BOP Cover?
A BOP comes packed with insurance coverages that are essential for a small business. It offers that protection from property damage/loss, and third-party liability apart from business interruption coverage. In essence, it is designed ideally to meet the risk management requirements of small businesses.
What Are the Insurance Plans Included in BOP?
Although the type of insurance plans may differ among the insurers, usually Business Owners Policy comes included with
Commercial general liability: the insurance plan protects businesses by covering instances like bodily injury of a third party caused by its property. For instance, a customer visits a retail showroom and slips causing a fall on its just mopped floor, and gets an injury, and thereby makes a personal injury claim. Under such circumstances, CGL is in place to compensate medical expenses for the visitor’s treatment.
Commercial property insurance: The insurance plan protects business property, its assets inventory, etc. against damage or loss caused by fire, theft, water damage, vandalism, and other natural disasters.
Business interruption insurance: The insurance plan takes care of a business’s finances. It enables businesses to maintain the overhead expenses including pay of employees and the temporary business loss if any accident or disaster forces the business to suspend its operation while renovation of commercial property continues.
Risks That a Business Owner’s Policy Does Not Include
Although BOP is considered a great business insurance option, there are certain risks that it does not take care of.
According to Charles Spinelli, a business person needs to understand the details of their BOP policy, including its coverage areas and exclusions. Small businesses can go for supplementary coverage insurance options to be added to a BOP to take care of other risk areas.
Noteworthy, BOP does not give insurance coverage toward discrimination lawsuits, criminal acts, employee injuries, business vehicles coverage, etc.
What Are the Optional Coverages That Can Be Added to BOP?
As the business grows, the owner can consider optional coverages, aka riders to escalate their protection making a considerably robust policy.
Some popular add-on plans may include
Cyber liability insurance: Supports with coverage of losses against data breach, hacking, and stealing of confidential data.
Commercial crime: Covers damages or losses because of in-house theft including fraud, forgery, and acts relating to employee dishonesty.
Professional liability insurance: Aka errors and omissions (E&O) insurance, the plan protects a business from accusations of professional negligence, mistakes, misconduct, and failure to provide the standard of services as committed.
Commercial auto insurance: provides insurance coverage to vehicles used for business purposes, such as delivery vans, cars, trucks, as well as trailers. Typically, the coverage includes medical expenses for the driver if injured.
To conclude, BOP is the best-suited and most demanding insurance policy designed for small businesses. It offers comprehensive protection against common risks including accidents, disasters, damage, legal action, etc. While small businesses carry relatively low risks BOP is affordable for them. Once a company multiplies, it can go for add-on plans.
