What Your BOP Will and Will Not Insure

Business insurance is designed to assist you in case of any unexpected or unavoidable challenges that might arise in your line of work. However, there are multiple commercial insurance policies on the market, each of which offers a different set of benefits, geared toward insuring different liabilities.

To make your insurance more cohesive, you might be able to qualify for a Business Owners Policy (BOP). While this is a far-reaching benefits package, it is not all-encompassing. You need to carefully examine your policy in order to understand where your benefits lie, and how you need to expand upon them.

Let’s take a closer look.

BOPs in Brief
Businesses need multiple types of insurance that fall under the umbrella term commonly referred to as commercial insurance. There is no such thing as business insurance the way there is auto or homeowners insurance. Therefore, to get comprehensive coverage, you must invest in several types of coverage at one time. To make this a bit easier on yourself, you can consider buying a chunk of your coverage through a BOP.

BOPs contain several foundational, critical business insurance options in one place, which frees you from the obligation to carry piecemeal coverage in certain cases. BOPs are also designed to meet the essential business insurance needs of both cost-conscious and convenience-minded small business owners. Your benefits will be housed in one place, and you won’t have to pay separate premiums for the coverage contained within this single package.

Coverage in Most BOPS
Generally, BOPs contain three to four benefits as standard coverage:

Property insurance: You might own the building in which you operate. If something happens to it, you need to pay for repairs or replacements. This coverage might help you do so.

Possessions insurance: Contents and physical assets within the business might sustain damage during mishaps. This coverage can help replace those items. In many BOPs, possessions insurance is part of the property insurance.
Commercial general liability (CGL) insurance: You have a duty to your clients. If something happens to them when doing business with you, then you might have to pay for their losses. Coverage will often pay for bodily injuries or property damage you cause to third parties through your negligence (even unintentional negligence). It can also assist you in case the affected party takes legal action against you.
Business interruption coverage: If a serious incident occurs in the business, then you might have to close temporarily. Yet, operating costs like salaries and utility bills might still beckon. This coverage helps you still pay those costs until you can reopen and start making money again. Coverage might also pay for temporary relocating the operation.

To calculate the various coverage limits within your BOP, you will need to consider factors like the value of your property and your company’s net worth. It’s essential to choose coverage based on how much you could stand to lose in case of a significant challenge, like an out-of-control fire in the business or a multi-million-dollar lawsuit. Your agent and a financial planner can help you better estimate these costs.

It Doesn’t Cover Everything
Though yes, your BOP is very expansive, it is not all-encompassing business insurance. Therefore, while your BOP is foundational, you will need to purchase extra coverage alongside it, in order to better protect you in the event of niche liabilities.

Supplementary policies you might need include:

Equipment breakdown insurance: Coverage will often pay for breakdowns to important machinery. The breakdown might hamper operations, after all. Coverage might also pay for sudden HVAC system failures, phone outages and similar occurrences that impact operations.
Cyber liability coverage: Computer systems might face risks of data theft or loss. If this happens, clients could suffer financial losses. Other threats, like identity theft, might also beckon. Coverage can help you pay for their data recovery and even lawsuits related to these incidents.
Data loss coverage: A policy might pay to help you cover repairs to data systems after losses.

Errors & omissions insurance: Your professional mistakes might cause financial losses to clients. This coverage might help you repay them for such losses.
Inland marine coverage: If you need to ship or move items, this coverage will protect them during transport.
Umbrella insurance: This is extra liability insurance that kicks in if your standard coverage surpasses its existing limits. Coverage might also pay for risks not covered by your CGL coverage.

In some cases, you can add this coverage to your BOP as endorsements. In others, you will have to buy separate policies. Your employee benefits, workers’ compensation and commercial auto insurance will be separate in all cases.

Though BOPs are not for everyone, they are great for small businesses through both their benefits offered and pricing structures. Still, the basic tenets of BOPs remain essential for all businesses, so use this policy as the guidepost to help you establish your own benefits, whatever those might be.

What Your BOP Will and Will Not Insure

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