A lot of work goes into starting a business. Before you open, you are going to invest in products, personnel and property. The list could go on for days.
Once you get off the ground, you will have to manage a constantly-changing environment. Different people, information and products will pass through the company every day. With each interaction, there’s a chance that something might go wrong. If it does, it could lead to damages that could cost you and your business a lot of money.
So, how do you avoid problems like these? One of the most effective ways to do so is with insurance. Commercial policies come in many shapes and sizes. In fact, businesses often need more than one. However, many have the option to invest in what’s called a Business Owners Policy, or a BOP. Take some time to learn about how this coverage might help you.
Why do Businesses Need Insurance?
You should insure your business in the same way you would your home or car. It’s a valuable asset in your possession. If something negative were to happen to it, there could be financial ramifications. Repair costs, lawsuits, lost wages and other bills could run into the thousands of dollars. If you have to repay those costs out of your own pockets, you might not be able to afford all of them. In worst-case scenarios, businesses fail because they cannot meet the costs of expensive damage.
That’s where insurance comes in handy. Your policy serves as a piece of financial support. Should an unforeseeable, damaging incident occur, then your policy might cover your losses. It will likely help pay for some or all the repair and compensation costs. Yet, the thing about insurance is that it must extend coverage to the incidents in question. If you don’t have coverage, you won’t be able to reap a financial benefit.
Many business owners find BOPs beneficial for their combined coverage elements. Ask your insurance agent where a good starting point is to get the correct coverage. You’ll likely have to tailor the coverage to meet your explicit needs.
What Coverage do BOPs Contain?
The thing about BOPs is that they often are base packages for business insurance. They usually contain several of the most common forms of commercial insurance. Many policies include:
- Liability Insurance: Extends protection to damage you might cause third parties. Might pay if a client gets hurt while interacting with the business and sues for damage. It might also cover you if you cause damage to a client’s property.
- Property Coverage: Can protect you in case of damage to your building or contents.
- Business Interruption Coverage: Businesses might have to close temporarily following damaging incidents. This coverage can help you still pay the bills during the closure. You might use it to keep employee wages solvent, pay rent and other utilities. It might even pay to help you operate out of a temporary location.
Within each element, you’ll likely need to adjust the limits and exclusions to better suit your needs. However, the point is that these policies come with various protection in one package. Therefore, you might not have to carry various policies, when you can get some protection in one block. This might help you save money on your premiums and deductibles, as well as have cohesion across coverage.
Coverage not in BOPS
BOPs are not all-inclusive. By only enrolling in a BOP, you might cheat yourself of certain types of protection you might need. Some of the coverage to carry in addition to the BOP includes
- Commercial Auto Insurance: Standard auto insurance typically does not cover business vehicles. If your company owns vehicles, this coverage extends to those cars. If you use a personal vehicle for business reasons, you might need this coverage as well.
- Workers’ Compensation: Most businesses have to provide workers’ comp. It allows the company to provide income to employees in case they get hurt on the job.
- Professional Liability Coverage: This coverage extends to the businesses services. If the businesses provides improper services or products, this coverage might provide protection.
- Employment Practices Liability Coverage: Should employees or prospective hires allege discrimination, harassment and other inappropriate actions by the business, this coverage might help.
- Umbrella Coverage: Adds additional liability protection past the limits of your standard coverage. It might cover additional liability risks not defined in your standard policy.
Other policies might also come in handy. So, tell your insurer about your specific business activities. Don’t let your BOP be the only policy be your only source of coverage.
In many cases, BOPS fit small and medium-sized businesses very well. However, larger commercial enterprises have a lot more assets to manage. As a result, they might need more coverage than simply a basic BOP. Regardless of the size of your business, ask your agent to help you determine which policies might benefit you.