As a small business owner, you want the peace of mind to know your business is protected should an unforeseen accident occurs. But when you start to think about all the things that could happen, the roof leaking during a storm, a break-in in the middle of the night, a customer injuring themselves...it can be a bit overwhelming. But don’t worry, you can cover a large majority of your risk with your go-to policy as a business owner: business owners insurance (business owner, business owners insurance. We know, insurance people are not very creative).
A Business Owners Policy, also called a BOP or Business Owners Insurance, is kind of like the combo appetizer plate at your favorite restaurant. While you can always purchase each item by itself, the restaurant packages the most popular options together in the combo platter and typically sells it for slightly less than those items purchased separately. In the case of BOPs, most insurance companies group a number of specific types of coverages together in one package to provide the combination of coverage you need in a single policy.
What’s Covered in a Business Owners Policy?
But before anyone actually purchases the proverbial pu pu platter, they typically want to know what individual items are included to see if it’s worth it. Let’s take a look at those coverages that are included (and not included) in Business Owners Insurance.
1. Property Insurance
A commercial property insurance plan works similar to a homeowner’s plan. It protects the physical building and its contents. In some cases, the plan will cover damage or loss caused by anything. This is often referred to as a “special,” “all-risk,” or “open-peril” policy. More often than not, however, the policy is “standard,” meaning only damage and losses caused by specific named events are covered. For example, a policy might list fire, tornado, and vandalism as covered perils, but will exclude other events such as war acts of God.
You can also elect to insure only the contents if you don’t own the building. Much in the way a renter needs to insure their personal belongings but not the actual building (since that is insured by the landlord), a BOP can only list the business personal property of the company. Think of those items that you need to run your business; computers, stoves, ice cream machines, signage, etc. Whatever your equipment may be, your company relies on it to function smoothly and would be burdened if it had to replace that equipment out of pocket.
2. Business Interruption Insurance
Along with making sure your damaged property gets repaired or replaced, a BOP can include business interruption coverage (also called Business Income Insurance) to make sure you can keep paying your bills until you’re able to open for business again. If your clothing store has to shut down for repairs, will your rent bill shut down too? What about payroll to key employees continuing to work? Typically the answer is no. That’s why Business Income Insurance is so important to the success of small businesses. Business Interruption insurance is the financial interjection your company may need to make sure that the doors can stay open once reopened.
3. Liability Insurance
No matter what business you’re in, whether you’re a contractor, a florist, or a gym owner, there’s always some risk that the product or service you offered could cause someone harm. For example, a patron may burn herself on hot coffee, or a TV that has been professionally installed could fall on someone passing underneath. Not only does it protect your business against injury claims, it also covers property damage (not the same property as able, we’re talking about other people’s property). So if a server spills a tray of drinks on a customers brand new laptop, you’re covered. Where property insurance is your go-to for the things of your business, liability is your go-to for the actions of your business.
4. Optional Coverages
Although the first three are standard in business owner policies, some policies may also include things like flood insurance and crime insurance depending on your risk profile. We’ll look at just a few:
Cyber Liability - Do you handle and store customers data? You’re at risk for data breach. We’re not saying your security isn’t good, but if Target can get hacked, so can you. This coverage can help with the extra expenses of notifying your clients for the breach, hiring credit monitoring services to keep your eye on the outcome (if any), and providing defense if you’re sued by your customers.
Professional Liability - Do you offer professional services such as financial or legal advise, brokering transactions (such as realtors), and design/planning? You may need to include professional liability. This separate coverage from standard liability insurance protects your company should you be sued for any error or negligence during those professional services provided.
Hired/Non-Owned - If your company doesn’t own any vehicles and you don’t have a commercial auto policy for your business, this coverage is key to making sure your business is protected when vehicles are on the road for business purposes. Think about if you have to rent a car for a conference, or you send an employee out to make a bank deposit. Should there be an accident, your BOP will be able to help pick up the tab rather than your checkbook.
Employers Practices Liability - Let’s face it, unless you have a full-time HR director, keeping up with changing laws and regulations regarding employment is tough. EPLI helps protect your company against employment practice related claims such as wrongful termination, discrimination, wage violations, and harassment.
If your company has unique risks, you may also be able to incorporate some other less common protections, such as spoiled merchandise, mechanical breakdown, and even forgery coverage. Talk with your agent if to see which of these are included automatically and which can be added for your unique situation.
What’s Not Covered in a Business Owners Policy?
As mentioned earlier, many things can fall under the umbrella of a Business Owners Policy, but there are a few types of coverage your business will likely need to purchase separately. These include:
- Workers Compensation Insurance - Coverage to you and your employees for work-related injury and illness.
- Health and Disability Insurance - Coverage for you and your employees for injury and illness not related to their job.
- Commercial Auto Insurance - Coverage to protect your company vehicles and any liability claims that may arise from an accident.
Who Needs a Business Owners Policy?
Business Owner Policies provide necessary protection to lots of organizations. Does your company own a building or business property? Is your company capable of being sued, even if the suit is frivolous? If you answer yes to both of those, you probably should have a BOP in place.
Where a BOP is the go-to for most businesses, some industries and professions are ineligible for this type of policy with most carriers. In that case you’ll either need to graduate to a commercial package policy (basically the same as a BOP, but with more flexibility in what endorsements can be added to the policy), or purchase the lines of insurance separately though your broker. Some BOP ineligible industries include non-durable goods manufacturing and heavy construction.
Get a Free Business Owners Insurance Quote
If you’re ready to explore your insurance options, Citizens General is here to support you. A new tool is available through The Hartford where you can not only quote BOPs, but your workers comp and commercial auto in as little as 10 minutes. Our brokers have been helping small businesses like yours for nearly a decade. We get to know your business and its risks, then find the best policies for your needs at the best prices. Let us help you secure your success; get your free no-obligation quote today.