Article Reviewed by a licensed insurance professional: Sam Meenasian (CA dept of insurance license #0F75955).
Estimated reading time: 6 minutes
Key Takeaways
- A BOP policy provides essential protections like general liability, commercial property, and business income coverage in one bundle.
- Business interruption insurance helps keep your business operational during unexpected shutdowns.
- A BOP is cost-effective compared to purchasing separate policies while ensuring necessary coverage for small businesses.
- Notably, a BOP does not cover workers’ compensation, federal motor carrier coverage, or flood and earthquake damages.
- Choosing the right BOP involves understanding your specific coverage needs and consulting with an insurance agent for optimal options.
5 Things to Remember
A BOP policy is ideal for businesses that are just starting out or if you need to stick to a budget. You typically get commercial property, general liability, and business income coverage in one policy.
Claims are may happen whether you have coverage or not. You want to have the coverage that is necessary to keep your business safe and sound, or you could be forced to close your doors.
Real-world losses often seem mild at first. This might be a leaky pipe, a slip and fall, or a burglary. You might think you have the costs under control without insurance, but most claims can amount to thousands of dollars, which you are not going to be able to pay out of pocket.
Business interruption insurance can help you to keep your business active and alive while you are forced to modify your operations.
Your BOP will not handle workers’ comp coverage or commercial auto coverage.
Why Are BOPs a Great Investment?
There are many reasons that a BOP is the perfect way to get your business insurance under control. This policy offers the types of coverage that you absolutely must have in place to operate in most parts of the US. These coverages can be far more expensive when they are paid for as individual policies. Bundling can save you lots of cash over the course of any given insurance period.
The US has millions of small businesses that employ nearly half of the workforce. Small businesses are essential to the American economy, but you can only contribute to this part of the workforce if you are able to afford to pay for your insurance protections.
What Coverage is Included in a BOP?
Your BOP will provide you with three major and important protections.
General Liability Coverage
This coverage is the basic policy that all businesses may need, regardless of the industry which they operate in. This policy may handle things like customer injuries, legal fees if you are sued, and property damage.
General Liability policy doesn’t cover you for faulty work, employee injuries, or issues with subcontractors. Your sub contractors need to have their own business insurance policy for their operation.
Commercial Property Coverage
This part of your BOP covers you if your building or your personal property is damaged due to something like fire or theft. Burglary losses, signage damage due to storms, and fire losses are the most common reasons that people access this portion of their insurance policy.
Flooding is not covered because FEMA offers coverage for flood damage. Equipment breakdowns is an optional coverage that you may select . You can take out a specific endorsement for this kind of protection if you want to have it in place to protect your business.
Business Income and Extra Costs
If you have to shut down your business due to something like a storm or a major power outage, you might find that you don’t have enough cash in reserve to cover operating costs during the time that you need to be closed down.
Business interruption coverage can help you to pay for wages, business essentials and even relocation for a set period of time to deal with an external problem that would otherwise force you to shut your business down for days or weeks at a time. There are lots of reasons that this coverage is worth the invested premium cost, and businesses that have paid for it are grateful when they need to access this kind of support.
Disasters are becoming increasingly common. The pandemic showed small businesses just how critical it can be to think about the things that might go wrong and could close your business for good. You need business interruption coverage if you want to be sure that you can keep your doors open to serve customers even when the going gets tough.
Included Extras That Your BOP Might Have
There are often added protections that are included in BOP policies that business owners are not aware of. You might have crime coverage or employee dishonesty protection in the case that a staff member has been stealing from you. You could also have access to hired and non-owned auto liability for any vehicles that your business doesn’t own that staff use for work processes. You might also have cyber breach coverage, which can be essential even if you have a simple website that only collects customer emails.
You might also be able to add other endorsements and extensions to your coverage based on what is offered by your insurance partner. Customizing your BOP coverage can be a great way to get more bang for your buck from your insurance policies.
What Isn’t Included?
Workers’ compensation is never included in a BOP. In some states, this coverage is state-run and managed, while in others, it is only mandated. You will also be unable to have federal motor carrier coverage on your BOP. EPLI, E&O, and flood or earthquake coverage is never included in your BOP either.
How Can I Choose the Right BOP?
You want to be sure that you start out with the required elements that you MUST have. If may need to have coverage to lease a building, you need to know what your landlord requires. Be sure that you cover yourself for the maximum possible coverage situation that could crop up for your business. Be sure as well that you know the replacement costs for things like inventory, equipment, and signage on your property. When looking at business income insurance, you need to look at burn rate and restoration time.
Before you bind any policy, check that you have all the right locations included in your quote. Be certain that your business property is reflected correctly in the policy. Also check that you have endorsements for additional coverage that you need to protect your business correctly.
If you are not certain about the right choices to make for your BOP policy limits and coverages, your insurance agent should be able to help. The team at USA Business Insurance can help you to find the right balance of coverage for your company. Whether you are just starting out or you are looking for ways to save some money on essential policies, our team can help you get access to the perfect insurance coverages for your needs and goals.
