Business Owners Policy: Insurance  for  Small Firms

A business owners policy or simply BOP should be considered if you have an ongoing small business or a start-up. What is BOP? The business owner’s policy pulls together a combination of needed insurance coverages in one package for major property and liability insurance risks. The BOP is a great fit for the very small to medium size business with less than 100 employees and an annual dollar volume of $5 million.

The great thing about a business owners policy is that you can buy a number of coverages together in one package and save money on the total rather than  buying separate policies such as commercial business liability, small business general liability insurance or various other liability insurance for business. Besides the coverages in a typical policy, you can buy specific options that you might need for your specific business. 

The great thing about a business owners policy is that you can buy a number of coverages together in one package and save money on the total rather than buying separate policies such as commercial business liability, small business general liability insurance or various other liability insurance for business. Besides the coverages in a typical policy, you can buy specific options that you might need for your specific business. 

BOP Coverages with Specific Options

For example, businesses involving book publishing, retail strip mall ownership, auto repair, florist, medical office, dry cleaning, funeral home or barber shop might all start out with the same business owners policy and then add special options. While the book publisher and strip mall owner may need many similar coverages, the book publisher might want to get an option to protect the company from lawsuits involving copyright infringement while the strip mall owner may need insurance to protect him from lawsuits that may ensue when he has to evict a tenant from a retail space who is not paying rent.

In looking at the BOP policies of various insurance companies, here is one offering that is fairly typical. There is a lot of good coverage here:

  • Property claims
  • Equipment breakdown
  • Income loss
  • Professional liability claims
  • Products and completed operations claims
  • Fire legal liability claims
  • Premises liability claims

Another big insurance company we looked at covers business liability, business and business personal property (BPP), equipment breakdown, business income interruption, fire legal liability and money and securities coverage in its standard policy. The money and securities coverage under this particular plan protects the business from losses of money on the premises up to $10,000. This policy might fit well with a rather substantial retailer who brings in $10,000 or less at its location daily.

Another big company offers coverage for bodily injury and property damage. This particular policy also covers personal and advertising injury, which includes libel, slander, defamatory or disparaging material or publication, infringement of the privacy or copyrights of others in its advertising, false arrest, wrongful entry or eviction or other invasion of the right of privacy occupancy.

States Set Insurance Rules

Naturally, these policies can vary with location, because the states set the rules regarding insurance. So San Diego business insurance might look somewhat different than New Jersey (NJ) business insurance.

These small business insurance plans can typically be had for a few hundred dollars a year. If you were to go into the market and purchase each of these separately, you would be paying in the thousands of dollars. What’s the difference in coverage between the above mentioned BOPs and buying each of these policies separately? The separate policies are really designed for the much larger company. If you have a small home-based business and tried to purchase an income loss policy, for example, it might cost you a bundle because most of those policies are designed for the larger company with a big income. Your company, although prosperous, might have relatively smaller income in comparison to that other company.

Check out a BOP policy with your independent insurance agent. While you are at it, you need to look for <a href="http://www.start-a-business-faq.com/umbrella_policy.html" target="_blank">umbrella coverage</a> to also cover the unknowns that can happen in business.

16 Tips for Buying Small Business Insurancve Coverage

Business Insurance Questions to Consider

When you meet with your insurance agent, here are some questions on insurance to begin the conversation of what your business may need:

  • Workers Compensation Insurance -- What is it and does my business need the coverage?
  • Home Business Insurance -- What does your home-based business need with regard to home business insurance? What does your homeowners' policy cover; what does it not cover?
  • Comprehensive General Liability (CGL) -- What is it and does my business need the coverage?
  • Professional Liability Insurance -- What is it and does my business need the coverage?
  • Product Liability Insurance -- What is it and does my business need the coverage?
  • Product Liability Insurance for Small Business -- When it comes to product liability, size really doesn't matter.
  • Flood Insurance for the Home-Based Business -- Do you need flood business insurance to protect your home office?
  • Excluded items -- What items are excluded from the typical insurance policy?
  • COBRA continuation health coverage -- Should you look into getting health insurance coverage under COBRA?
  • COBRA Premium reduction -- Are you eligible under The American Recovery and Reinvestment Act of 2009 (ARRA)for a premium reduction under COBRA?
  • Disability Insurance -- What is it and do I need it?
  • Directors and Officers Insurance -- What is it and does my business need the coverage?
  • Commercial Auto Insurance -- Why shouldn't I keep the policy I already have on my car?
  • Small Business Health Insurance -- What's the best way to get coverage with your new business?
  • Accidental Death and Dismemberment -- What is it and does my business need the coverage?
  • Advertisers Personal Injury -- What is it and does my business need the coverage?
  • Business Continuation Coverage/Buy-Sell Planning -- What is it and does my business need the coverage?
  • Business Interruption Insurance -- What is it and does my business need the coverage?
  • Business Owners Policy (BOP) -- What is it and does my business need the coverage?
  • Umbrella Policy -- What is it and does my business need the coverage?
  • Commercial Automobile Insurance -- What is it and does my business need the coverage?
  • Crime Coverage -- What is it and does my business need the coverage?
  • Cyber Coverage -- What is it and does my business need the coverage?
  • Employment Practice Liability -- What is it and does my business need the coverage?
  • Fiduciary Liability -- What is it and does my business need the coverage?
  • Fire Legal Liability -- What is it and does my business need the coverage?
  • Group Life Insurance -- What is it and does my business need the coverage?